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A SELECTIVE MICROFILM EDITION

PART IV
(1899-1910)

Thomas E. Jeffrey
Lisa Gitelman
Gregory Jankunis
David W. Hutchings
Leslie Fields

Theresa M. Collins
Gregory Field
Aldo E. Salerno
Karen A. Detig
Lorie Stock

Robert Rosenberg
Director and Editor

Sponsors

Rutgers, The State University Of New Jersey
National Park Service, Edison National Historic Site
New Jersey Historical Commission
Smithsonian Institution

University Publications of America
Bethesda, MD
1999

Edison signature used with permission ofMcGraw-Edison Company

Thomas A. Edison Papers
at

Rutgers, The State University
endorsed by

National Historical Publications and Records Commission
18 June 1981

All ri$its reserved. No part of this publication including any portion of the guide and index or of
the microfilm may be reproduced, stored in a retrieval system, or transmitted in any form by any
means— graphic, electronic, mechanical, or chemical, includingphotocopying, recorclingor taping,
or information storage and retrieval systems — without written permission of Rutgers, The State
University, New Brunswick, New Jersey.

The original documents hi this edition are from the archives at the Edison National Historic Site
at West Orange, New Jersey.

ISBN 0-89093-703-6

THOMAS A. EDISON PAPERS

Robert A. Rosenberg
Director and Editor

Thomas E. Jeffrey
Associate Director and Coeditor

Paul B. Israel

Managing Editor, Book Edition
Helen Endick

Assistant Director for Adndnistration

Associate Editors
Theresa M. Collins
Lisa Gitelman
Keith A. Nier

Research Associates

Gregory Jankunis
Lorie Stock

Assistant Editors
Louis Carlat
Aldo E. Salerno

Secretary
Grace Kurkowski

Amy Cohen
Bethany Jankunis
Laura Konrad
Vishal Nayak

Student Assistants

Jessica Rosenberg
Stacey Saelg
Wojtek Szymkowiak
Matthew Wosniak

BOARD OF SPONSORS

Rutgers, The State University of New
Jersey

Francis L. Lawrence
Josepii J. Seneca
Richard F. Foley
David M. Osliinsky
New Jersey Historical Commission
Howard L. Green

National Park Service
John Maounis
Maryanne Gerbauckas
Roger Durham
George Tselos
Smithsonian Institution
Bernard Finn
Arthur P. Molella

EDITORIAL ADVISORY BOARD

James Brittain, Georgia Institute of Technology
R. Frank Colson, University of Southampton
Louis Galambos, Johns Hopkins University
Susan Hockey, University of Alberta
Thomas Parke Hughes, University of Pennsylvania
Peter Robinson, Oxford University

Philip Scranton, Georgia Institute of Technology/Hagley Museum and Library
Merritt Roe Smith, Massachusetts Institute of Technology

FINANCIAL CONTRIBUTORS

PRIVATE FOUNDATIONS
The Alfred P. Sloan Foundation
Charles Edison Fund
The Hyde and Watson Foundation
National Trust for the Humanities
Geraldine R. Dodge Foundation

PUBLIC FOUNDATIONS
National Science Foundation
National Endowment for the
Humanities

National Historical Publications and
Records Commission

PRIVATE CORPORATIONS AND INDIVIDUALS

Alabama Power Company

Anonymous

AT&T

Atlantic Electric

Association of Edison Illuminating
Companies

Battelle Memorial Institute
The Boston Edison Foundation
Cabot Corporation Foundation, Inc.
Carolina Power & Light Company
Consolidated Edison Company of New
York, Inc.

Consumers Power Company
Cooper Industries
Corning Incorporated
Duke Power Company
Entergy Corporation (Middle South
Electric System)

Exxon Corporation

Florida Power & Light Company

General Electric Foundation

Gould Inc. Foundation

Gulf States Utilities Company

David and Nina Heitz

Hess Foundation, Inc.

Idaho Power Company

IMO Industries

International Brotherhood of Electrical
Workers

Mr. and Mrs. Stanley H. Katz
Matsushita Electric Industrial Co., Ltd.
Midwest Resources, Inc.

Minnesota Power
New Jersey Bell
New York State Electric & Gas
Corporation

North American Philips Corporation
Philadelphia Electric Company
Philips Lighting B.V.

Public Service Electric and Gas Company

RCA Corporation

Robert Bosch GmbH

Rochester Gas and Electric Corporation

San Diego Gas and Electric

Savamioh Electric and Power Company

Schering-Plough Foundation

Texas Utilities Company

Thomas & Betts Corporation

Thomson Grand Public

Transamerica Delava] Inc.

Westinghouse Foundation
Wisconsin Public Service Corporation

A Note on the Sources

The pages which have been
filmed are the best copies
available. Every technical
effort possible has been
made to ensure legibility.

PUBLICATION AND MICROFILM
COPYING RESTRICTIONS

Reel duplication of the whole or of
any part of this film is prohibited
In lieu of transcripts, however,
enlarged photocopies of selected
items contained on these reels
may be made in order to facilitate
research.

Legal Department Records
Motion Pictures - Case Files

Greater New York Film Rental Company v.

Motion Picture Patents Company et al.

Greater New York Film Rental Company v.

General Film Company et al.

This folder contains material pertaining to suits brought by the Greater
New York Film Rental Co. against the Motion Picture Patents Co. (MPPCo)
and the General Film Co. in the State of New York and in the federal courts.
Other defendants included Thomas A. Edison, Inc., the Edison Manufacturing
Co., the American Mutoscope & Biograph Co., and other manufacturers
licensed by MPPCo. The cases were initiated in 191 1 and 1914 and involved
disputes over licenses and allegations of monopoly against MPPCo and the
General Film Co. The selected items are primarily from a printed record in the
state case: Summons, Complaint, Affidavits, Injunction and Order to Show
Cause. Several pages bear marginal notations by Edison. Also included are a
few letters regarding the eventual settlement of the federal suit by decree in
1916. Among the items not selected are writs and pleadings; correspondence
relating to legal fees and the progress of litigation; and other letters to and from
the defendant companies.

Supreme Court of the State of New York,

NEW YORK COUNTY.

Plaintiff, ■

Motion Picture Patents Company and others,

Defendants.

SUMMONS, COMPLAINT, AFFIDAVITS, (

INJUNCTION AND ORDER '

TO SHOW CAUSE. ■ *

INDEX.

Injunction Order ’ and Order, to Show

Cause . 1

Summons . 5

Complaint and Verification and Exhibit A. 7-57

Affidavit of William Fox . 58

Affidavit of Louis Rosenbluh . 91

Affidavit of William H. Swanson . 98

Affidavit of James J. Lodge . Ill

Affidavit of Abraham Carlos . . . 117

Affidavit of Samuel P. Weissmann . 121

Affidavit of Gustavus A. Rogers . 124

Supreme Court of the State of New York,

NEW YORK COUNTY.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany, General Film Company,
American Mutoscopo & Bio-
graph Company, Edison Man¬
ufacturing Company, Essanay
Film Manufacturing Com¬
pany, Kalem Company, George
Kloine, Lubin Manufacturing
Company, Patlie Frercs, Selig
Polyscope Company, Vita-
graph Company of America,
and Melies Manufacturing
Company,

Defendants.

It appearing to my satisfaction, by the annexed
complaint, verified December 1G, 1911, and by the
annexed affidavits of William Fox, verified on the
same day, James J. Lodge, verified December 15,
I fill, William II. Swanson, Louis Rosenbluh, Ab-

(Injunction Order and Order to Show Cause.)

mlinm Carlos and Sanniol P. lYeissionmi eaoli
verified on tho same day, and Gustavus A. Rogers,
verified December 10, 1011, that the plaintiff prays
for and is entitled to judgment against the de¬
fendants, restraining the commission of the acts
hereinafter enjoined, and that the commission of
such acts during tho pendency of this action
would produce irreparable injury to tho plain¬
tiff, and render the judgment ineffectual; and
that the defendants, during the pendency of this
action, are doing and procuring and suffering to
be done, and threaten and are about to do and
procure and suffer to be done, the acts hereinaf¬
ter mentioned, in violation of tho plaintiff’s
rights respecting tho subject of tho action, and
tending to render tho judgment ineffectual, such
acts consisting of an attempted cancellation of
the plaintiff’s license and of intended and threat¬
ened discontinuance of the supply of motion pic¬
ture films to the plaintiff’, which it 1ms heretofore
received and is entitled to receive, and of inter¬
ference and threatened interference with the
plaintiff’s business and customers, tending to the
destruction of the plaintiff’s business; and that
the plaintiff is entitled to an injunction restrain¬
ing the cancellation of his license and the impair¬
ment or discontinuance of the aforesaid service
to the plaintiff, and all interference with its busi
ness and customers upon the grounds that
the plaintiff is entitled, both by virtue of
its license and tho other contracts sot forth
f , tlle „ complaint, and by virtue of the
facts alleged m the complaint and accom¬
panying affidavits, to receive from the defend¬
ants, pursuant to the duty resting upon them and
arising out of the facts sot forth, continued un¬

( Injunction Order and Order to Show Cause.)

impaired and efficient service, as heretofore, of
motion picture films; and that the defendants
threaten and are about to interfere with and cut
off tho plaintiff’s supply of such films, and other¬
wise to interfere with and destroy the plaintiff’s
business; and that tho plaintiff has no adequate
remedy at law, and is without other remedy than
tho injunction prayed for in the complaint; and
tho. plaintiff having given the security provided
bylaw;

Now, on motion of Rogers & Rogers, attorneys
for the plaintiff;

It is obdkhed, that the defendants, and each of
them, and their and each of their officers, direc¬
tors, attorneys, agents and servants, bo and they
hereby are enjoined and restrained, until tho fur¬
ther order of this Court, from interfering with
tho plaintiff’s business, or from discriminating
against it, or from ceasing to supply the plaintiff', .
without delay or discrimination, with motion pic¬
ture films produced by tho defendants designated
as licensed manufacturers, respectively, upon the
plaintiff’s orders, upon tho plaintiff’s paying for
such films and continuing to perform the condi¬
tions of its license, Exhibit A, and from in any
wise altering, to the plaintiff’s prejudice, in com¬
pleteness and promptness of . service, or other¬
wise, the methods of business heretofore and now
prevailing between the plaintiff and the defend¬
ants designated as licensed manufacturers; from
taking from tho plaintiff’s possession or that of
any customer or exhibitor, or in any wise inter¬
fering with, by means of actions of replevin, or
otherwise, any of tho film possessed by the plain¬
tiff; from interfering with the plaintiff’s busi-

( Injunction Order and Order to Show Cause.)

uoss oi' customers, and from attempting to alien¬
ate or entice said customers from the plaintiff;
and from cancelling or attempting to cancel the
plaintiff’s license, Exhibit A, or from in any wise
interfering with the plaintiff’s business, or from
requiring or inducing the defendants designated
as licensed manufacturers, or any of them, to
cut off, limit, or in any wise make less efiiciont than
heretofore, the supply of films 'by said licensed
manufacturers, respectively, to the plaintiff, or
from in any wise interfering with the business
relations hitherto and now existing between the
plaintiff and said licensed manutaetnrors.

The plaintiff is hereby given leave to servo
additional papers in support of its motion to
continue this injunction pendente tile, on or be¬
fore December 19, 1911.

Lot the defendants show cause at a Speciul
Term, Part I, of this Court, appointed to bo hold
at the New York County Court House in the
Borough of Manhattan, City of New York, on the
20 day of December, 1911, at the opening of
Court on that day, or as soon thereafter as coun¬
sel can be heard, why a rule or order should
not bo made continuing this injunction dur¬
ing the pendency of this action ; mid why the plain¬
tiff should not have such other, further or differ¬
ent relief as may seem good to the Court.

Let a copy of the summons and complaint hero¬
in and of the aforosuid affidavits, together with
» copy of this order, ho served upon the defend¬
ants not later than December 18, 1911; and such
service shall he sufficient.

December 16, 1911.

John Ford,

Justice Supreme Court.

SUPREME COURT OP THE STATE OP
NEW YORK,

NEW Y011K COUNTY.

Q iieateb New York Film Rental
Company,

Plaintiff',

against

Motion Picture Patents Com¬
pany, General Film Company,

American Mutoscope & Bio- *4

graph Company-, Edison Manu¬
facturing Company, Essanay Summons.

Film Manufacturing Com¬
pany, Kalem Company,

George Kleine, Ludin Manu¬
facturing Company, Patiie '

Freiies, Selio Polyscope Com¬
pany, Vitagrapii Company of
America and Melies Manu¬
facturing Company,

Defendants.

To the above-named Defendants:

You are hereby summoned to answer the com¬
plaint in this action, and to serve a copy of your
answer on the plaintiff’s attorneys within twenty-
days after the service of this summons, exclusive
of the day of service ; and in case of your failure
to appear or answer, judgment will be taken

(Summons.)

against you by default, for the relief demanded
in the complaint.

Trial desired in New York County.

Dated, New York, December 16, 1911.

Rogers & Rogers,

Attorneys for Plaintiff,

Office and Post Office Address :

No. 160 Broadway,
Borough of Manhattan,

New York City.

SUPREME COURT OF THE STATE OF
NEW YORK.

New York County.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany, General Film Company,
American Mutoscope & Bio-
graph Company, Edison Manu-
pacturinq Company, Essanay
Film Manufacturing Com¬
pany, Kalem Company’,
George Kleine, Lurin Manu¬
facturing Company', Patiie
Freres, Selig Polyscope Com¬
pany, Vitagraph Company of
America and Mislies Manu¬
facturing Company,

Defendants.

The plaintiff, by Rogers & Rogers, its attorneys,
complains of the defendants, and alleges as fol-

First: The plaintiff is, and since March, 1907,
has been, a domestic corporation, having its office
and principal place of business in the Borough of
Manhattan, City of New York, and engaged as a
rental agency in leasing to exhibitors in said City
of New York and elsewhere in the State of New

( Complaint ,)

York, and in the States of New Jersey, Con¬
necticut and Massachusetts, motion picture films
for use in projecting machines, togetkor with
such projecting machines and appliances, for'
the purpose of enabling exhibitors to give
motion picture exhibitions in the manner here¬
inafter more fully described. The term “rental
agency,” as herein used, moans nn individual,
partnership or corporation, which, since the or¬
ganisation of the defendant Motion Picturo Pat¬
ents Company in or about December, 1908, after
first obtaining a license from said Patents Com¬
pany, leases motion picturo films from certain
manufacturers (hereinafter referred to ns licensed
manufacturers) licensed by said Patents Com¬
pany and operating by virtue of such licenses
under the patents owned by said Patents Com¬
pany, and hereinafter more fully described, and
in turn sub-lets such films, together with project¬
ing machines and appliances purchased from vari¬
ous sources, such machines being first licensed
by said Pntents Company, to exhibitors who are
licensed by said Patents Company, for the pur¬
pose of enabling the exhibitors to give public ex¬
hibitions of motion pictures.

Second: Th0 defendant Motion Picture Pat¬
ents Company (hereinafter referred to as the
Patents Company) is, and since about December,
1JUS, lias been, a foreign corporation, organized
and existing under and pursuant to the laws of
the State of New Jersey, and having its office and
principal place of business in the Borough of
Manhattan, City of New York. It is the owner
ot all the patents hereinafter described for motion
picture films, cameras and parts thereof, and

( Complaint ,)

projecting machines and parts thereof, and is,
and -ever since its organization lias been, engaged
in licensing certain manufacturers to make such
films under said patents, and also to import films
from foreign countries, and in licensing other
manufacturers to construct projecting machines,
and in licensing film rental agencies, which by
means of such licenses are enabled to obtain films
from said licensed manufacturers.

(a) The defendant General Film Company is,
and since April 21, 1910, has been, a foreign cor¬
poration, organized and existing under and pur¬
suant to the laws of the State of Maine, and hav¬
ing its principal office and place of business, in the
Borough of Manhattan, City of New York. It ib,
and since its organization has been, engaged in
business as a rental ageney, holding a license ns
such agency from said Pntents Company, and
leasing motion picture films from the aforesaid
licensed manufacturers, and in turn leasing such
films, together with projecting machines and ap¬
pliances, to exhibitors in the State of New York
and elsewhere and throughout the United States
and Canada.

(b) The defendant American Mutoscope & Bio¬
graph Company is, and at all times hereinafter
mentioned was, a foreign '-corporation, organized
and existing under and pursuant to the laws of
the State of New Jersey, and having its office and
principal place of business in the Borough of Man¬
hattan, City of New York, and engaged as one
of the aforesaid licensed manufacturers, holding
a license from said Patents Company, in manu¬
facturing motion picture films, and in leasing

28 ( Complaint .)

the same to licensed rental agencies in the State
oi' New York and elsewhere and throughout -the
United States and Canada.

(c) The defendant Edison Manufacturing Com¬
pany is, and at all times hereinafter mentioned
has boon, a foreign corporation, organized and
existing under and pursuant to the laws of the
State of Now Jersey, and having an office and
carrying on business in the Borough of Manhat¬
tan, City of New York, and engaged, among other

29 things, as one of the aforesaid licensed manufac¬
turers, holding a license from said Patents Com¬
pany, in manufacturing and leasing motion pic¬
ture films to licensed rental agencies in tho State
of New York and elsewhere and throughout the
United States and Canada.

W The defendant Essanay Film Manufactur¬
ing Company is, and at all times hereinafter
mentioned has been, a foreign corporation, or¬
ganized and existing under and pursuant to the
laws of the State of Illinois, and engaged,
since December, 1908, as one of the afore-
3 said licensed manufacturers, holding a li¬
cense from said Patents Company, in manufac¬
turing and leasing motion picture films to licensed
rental agencies in the State of New York and
elsewhere and throughout the United 'States and
Canada.

(e) The defendant Kalem Company is, and at
all times hereinafter mentioned has been, a do- .
mestic corporation, engaged, since December,
1908, as one of the aforesaid licensed manufactur¬
ers, holding a license from said Patents Company,

(Complaint.) 31

in manufacturing and leasing motion picture films
to licensed rental agencies in tho State of New
York and elsewhere and throughout the United
Slates and Canada.

(/) Tho defendant George Kloine is, and since
December, 1908, has been, one of the licensed man¬
ufacturers aforesaid, holding a license from said
Patents Company, and engaged in importing and
leasing motion picture films to licensed rental
agencies in the State of New York and elsewhere
and throughout the United States and Canada. 32

(ff) The defendant Lubin Manufacturing Com¬
pany is, and at all times hereinafter mentioned
has been, a foreign corporation, organized and
existing under and pursuant to the laws of the
State of Pennsylvania, and engaged, since Decem¬
ber, 1908, as one of the aforesaid licensed manu¬
facturers, holding a license from said Patents
Company, in manufacturing and leasing motion
picture films to licensed rental agencies in the
State of Now York and elsewhere and throughout
the United States and Canada.

(h) The defendant Pathe Freres is, and at all
times hereinafter mentioned has been, a foreign
corporation, organized and existing under and
pursuant to the laws of the State of New Jersey,
having an office and carrying on business in the
Borough of Manhattan, City of Now York, and
engaged, since December, 1908, as one of the
aforesaid licensed manufacturers, holding a li¬
cense from said Patents Company, in manufac¬
turing and leasing motion picture films to -licensed
rental agencies in the State of New York and

34 ( Complaint .)

elsewhere and throughout the United States and
Canada.

(i) The defendant Selig Polyscope Company is,
and at all times hereinafter mentioned has been,
u foreign corporation, organized and existing un¬
der and pursuant to the laws of the State of Illi¬
nois, and engaged, since Decembor, 1908, as one
of the aforesaid licensed manufacturers, holding a
license from said Patents Company, in manufac¬
turing and leasing motion picture films to licensed

35 rental agencies in the State of New York and else¬
where and throughout the United States and
Canada.

U) The defendant Vitagraph Company of
America is, and at all times hereinafter mentioned
has been, a domestic corporation, and engaged,
since December, 1908, as one of the aforesaid li¬
censed manufacturers, holding a license from said
Patents Company, in manufacturing and leasing
motion picture films to licensed rental agencies in
the State of New York and elsewhere and through¬
out the United States and Canada.

(k) The defendant Melies Manufacturing Com¬
pany is, and since about July, 1910, has been, a
domestic corporation, and engaged as one of the
aforesaid licensed manufacturers holding a license
from said Patents Company, in manufacturing
and leasing motion picture films to licensed rental
agencies in the State of New York and elsewhere
throughout the United States and Canada.

(l) All of the aforesaid defendants, except Mo¬
tion Picture Patents Company and General Film

( Complaint .) ^ .

Company, are heroin collectively referred to as
the licensed manufacturers.

Tuimi: The business of manufacturing films
and; projecting machines for tile purpose of ex¬
hibiting motion pictures lias, during a period of
about ten years past, become one of great extent;
and importance in the United States and Canada
and in foreign countries, and during the pastfour
or five years has developed to vast proportions,
involving tlie investment of many millions of dol¬
lars. Every city and’ village and almost every 38-
hamlet in tlie land has moving picture shows,
which linvo proved a means of amusement, recrea¬
tion and education at small cost to grout numbers
of people. Such shows are constantly increasing
in popularity, and new theatres and other places
of entertainment, for the purpose of showing such
pictures, are constantly being established through¬
out the United States. Such exhibitions have
also proved of groat value for educational pur¬
poses, and are used in schools and colleges, and
the photographing of moving objects upon the
films hereinafter described has proved valuable in
■scientific research, and is being increasingly used 39
for such purposes.

Foturnr: Prior to December, 1908, when the
Patents Company was organized,, letters patent
of the United States, covering cameras, with which
moving, pictures wore taken, and the negative
films upon which the photographs wore made, and
the positive films to which tho pictures wore trans¬
ferred, and the projecting machines by means of
which the pictures upon the films wore magnified
and thrown upon screens, and relating generally

u \

40 (Complaint.) *

to improvements in tilts motion picture urt, wore J

owned and controlled by tliree of tlie defendants $

hereinbefore described as licensed manufacturers |

to wit : The Edison Manufacturing Company, the |

American Mutoscope and Biogrnph Company, and 1

the Vitagraph Company of America, and by tlie J

Armat Moving Picture Machine Company. Said 1

owners, and other of the licensed manufacturers d

operating under licenses, manufactured and sold !j

apparatus and films covered by said patents, and j

still other of the defendant manufacturers disre- |

41 garded and denied the validity of said patents J

and carried on business despite them. \

(a) The patents so owned and controlled by I

said defendants and said Armat Company were I

the following:

No. 578185, dated March 2, 1807, for Vitnscopo, !

granted to Thomas Armat; ;

No. 580749, dated April 13, 1807, for Vitascope, |

granted to Thomas Armat;

No. 58G053, dated July 20, 1897, for Phan- ;

toscopo, granted to Charles F. Jenkins and

42 Thomas Armat;

No.- 58801(5, dated August 24, 1897, for Nine- i

toseopo granted to Charles M. Campbell, as as- I

signee of Willard G. Steward and Ellis F. Frost; |

No. G73320, dated April 30, 1901, for Kino-
toscoiio, granted to the American Vitagraph. Com- I

pany, ns assignee of Albert E. Smith ; I;

No. 673992, dated May 14, 1901, for Vitascope, I

granted to Thomas Armat ;

No. 707934, dated August 2G, 1902, for Project- 1

ing ICinetoscope, granted to E. & H. T. Anthony l|

& Co., as assignees of AVoodville Latham ; |

( Complaint .) ^

No. 722382, dated March 10, 1903, for Animated
Picture Apparatus, granted to American Mutos¬
cope & Biograph Co., as assignee of John A.
Pross ;

No. 744251, .dated November 17, 1903, for Kino-
loscopo, granted to Albert E. Smith ;

No. 770937J dated September 27, 1904, for Kine-
toscopo, granted to the Vitagraph Company of
America, ns assignee of Albert E. Smith;

No. 771280, dated October 4, 1904, for Winding
Reel, granted to Albert E. Smith ;

No. 785205, dated March 21, 1905, for Flame- 44
Shield for Kinetoseopo, granted to the Vitagraph
Company of America, as assignee of William Ell-
wood ;

No. 785237, dated March 21, .1905, for Film-
Holder for Kinetoscope, granted to the Vitagraph
Company of America, as assignee of Albert E.
Smith ;

Reissued letters patent Nos. 12037 and 12038,
dated September 30, 1902, issued to Thomas A.
Edison, in place of original letters patent No.
5891G8, dated August 31, 1897, issued to said
Thomas A. Edison, for a new and useful improve¬
ment in Kinetoscopic cameras; 45

Reissued letters patent No. 12192, dated Jan¬
uary 12, 1904, issued to Thomas A. Edison, in
place of original letters patent No. 589168, dated
August 31, 1897, issued to said Thomas A. Edison,
for Kinetoscopic film.

(5) Each of the aforesaid patents was granted
for the term of seventeen years from the date of
issue of the original patent; and the plaintiff al¬
leges, upon information and belief, that said pat¬
ents collectivoly embraced the entire art of photo-

46 ( Complaint .)

' graphing moving objects, tile cameras with which
such photographs were lukcn, the films upon
which photographs wore made, and those to which
they wore transferred, and the projecting ma¬
chines and appliances by means of which the pic¬
tures were shown.

Firm : Prior to the organization of the Patents.
Company in December, 1908, the defendants here¬
in designated as licensed manufacturers carried
on their business independently, each competing
47 with all of the others in the manufacture and sale
of their aforesaid products, and there was actual
and active competition throughout the United
States among all of said defendants. During suid.
period of competition, said defendants sold their
products, and particularly their films, outright to
concerns like the rental agencies hereinbefore de¬
scribed, which in turn leasod the apparatus and
films purchased by them to exhibitors throughout
the United States and Canada. Said defendants
designated as licensed manufacturers, also, during
said period of competition, imported from foreign
48 countries largo quantities of film there manufac¬
tured, and sold the same to such rental agencies
for distribution by lease to exhibitors throughout
the United States. Said rental agencies purchas¬
ed outright, and became the absolute owners of,
the film sold to them by said defendants desig¬
nated as licensed manufacturers.

(a) The apparatus and films were manufactur¬
ed and sold by the manufacturers in various
states, to wit: New York, Pennsylvania, Illinois,
and other states, and such films wore also import¬
ed into the United States from foreign countries;

(Complaint.) 4,

and all such films, domestic and foreign, were sold
in and transported to all the States and Territories
of the United States, and into the Dominion of
Canada; and the sale and transportation thereof
constituted interstate and foreign commerce.

( b ) The rental agencies leased such apparatus
and films to exhibitors in all the States and Terri¬
tories and in Canada; and such leasing and the
transportation of such apparatus and films con¬
stituted interstate and foreign commerce.

(c) During said period of competition, a large
number of sucli rental agencies, as aforesaid (ex¬
cept that they were free and independent and
not licensed or subject to control), was es¬
tablished throughout the United States, carry¬
ing on business ns hereinbefore described ; and, in
the Borough of Manhattan, City of Now York,
down to the spring of 1909, when the defendant
Patents Company was in active operation, there,
were upwards of twenty such rental agencies ac¬
tively competing with one another for the busi¬
ness of leasing apparatus and films to exhibitors

in the City of New York and vicinity, and else- 5 1
where in the State of New York and in the United
States.

(d) The result of the aforesaid competition
among the defendants designated as licensed
manufacturers was to improve the product of the
manufacturers and to keep down the cost thereof
to the rental agencies; and the effect of the com
petition among the rental agencies was to im¬
prove the service given and keep down the cost
to the exhibitors.

52 ( Complaint .)

Sixth : In December, 1908, the defendant Pat¬
ents Company was organized, ns aforesaid, for
the purpose of stifling and suppressing tile exist¬
ing competition among the manufacturers heroin
designated ns licensed manufacturers, and to
combine said licensed manufacturers into or sub¬
ject them to the control of a single corporation,
which should acquire the ownership of all of tho
aforesaid letters patent; and with the ultimate ob¬
ject of extinguishing, also, competition among the
aforesaid rental agencies throughout the United

53 States, and driving said rental agencies out of
business, and bringing the entire business of fur¬
nishing apparatus and films to exhibitors within
the grasp of said Patents Company and those in¬
terested therein and who had brought about its
organization.

Sbvbntii : Immediately after tho organization
of tho Patents Company, all of the aforesaid let¬
ters patent were assigned to it by the respective
owners thereof, and said Patents Company tlierc-

( Complaint .)

tare and sale of the aforesaid apparatus and films
and in intrastate and interstate and foreign trade
aud commerce therein, and, pursuant to tho
agreement then aud there made, of some of the
details of which tho plaintiff is not informed, all
of the aforesaid letters patent were assigned ami
transferred to said Patents Company, and each
of said licensed manufacturers entered into a li¬
cense agreement with said Patents Company, by
which each of said licensed manufacturers cove¬
nanted and agreed only to lease, and not to sell,
in the United States or its territories or posses- 56
sions (except its insular possessions and Alaska),
motion picture films manufactured or imported by
said licensed manufacturers, respectively, of a
width greater than approximately one inch, and
under the condition and restriction that said
films should bo used only on exhibiting and pro¬
jecting machines licensed by said Patents Com¬
pany under letters patent owned by it.

(b) The motion picture films theretofore aud
since manuf 1 11 cd I sa 1 I eti se 1 manufactur¬
ers, and used for exhibition purposes, were and
are of a width greater than approximately one 57

(c) In and by said license agreement, said Pat¬
ents Company granted to each of said licensed
manufacturers the right and license, for the
United States, its territories and possessions,
to manufacture and sell motion picture exhibiting
or projecting machines, embodying one or more of.
the inventions described and claimed in certain of
the letters patent hereinbefore mentioned; and
said Patents Company released each licensee from

( Complaint .)

liability i'or profits and damages by reason of
prior infringement.

(il) In and by said license agreement, the li¬
censee admitted the validity of the letters patent
described therein, to wit: Numbers 578185,
580749, 58G953, 588910, 073329, 073992, 707934,
722382, 744251, 770937, 771280, 785205, and
785237; the validity of some or all of which had
theretofore been questioned and had been in liti¬
gation among the respective owners of said let-

59 tors patent and between some or all of such own¬
ers and other of the defendants heroin desig¬
nated ns licensed manufacturers.

(e) In and by said license agreement, each
licensee covenanted and agreed, that on all mo¬
tion picture exhibiting or projecting machines
containing one or more of the inventions de¬
scribed and claimed in letters patent numbers
073329, 744251, 770937, 771280, 785205, and
785237, made in the United States, its territories
and possessions, by the licensee, and sold during

60 the operation of the license, the licensee would
pay certain fixed royalties; and that every mo¬
tion picture exhibiting or projecting machine
capable of exhibiting or projecting, by trans¬
mitted light, motion pictures on a film of approxi¬
mately greater width than one inch, and embody¬
ing one or more of the inventions described and
claimed in letters patent numbers 578185, 580749
580953, 588910, 073329, 073992, 707934 700380’
744251, 770397, 771280, 785205, and 785237, made
m the United States, its territories or possessions,
by the licensee, should he sold by the licensee,
except when sold for export, under the restrie-

21.

{Complaint.) 61

tion and condition that such exhibiting or pro¬
jecting machines should bo used solely i'or ex¬
hibiting or projecting motion pictures containing
the inventions of reissued lottors patent number
12192, leased by a licensee of the Patents Company
and upon other terms to bo fixed by said Putonts
Company and complied with by the user, which
other terms should bo only the payment of a roy¬
alty or rental to the Patents Company while in
use. It was further covenanted, that each licensee
would attach in a conspicuous place, to each ex- ■
hibiting or projecting machine of the licensee’s 62
manufacture, sold by it, except for export, a plate
showing plainly not only the dates of the letters
patent under which the machine was licensed, but
also the following words and figures:

“Serial No.

Patented. No.

“The sale and purchase of this machine
gives only the right to use it solely with mov¬
ing pictures containing the invention of re- "
issued patent No. 12192, leased by a licensee
of the Motion Picture Patents Company, the 6,
owner of the above patents and reissued pat- 3
ont, while it owns said patents, and upon
other terms to be fixed by the Motion Picture
Patents Company and to be complied with by
the user while it is in use and while the Mo¬
tion Picture Patents Company owns said
patents. The removal or defacement of this
plate terminates the right to use this ma¬
chine.”

( f ) In and by said license agreement, each li¬
censee further covenanted that every motion pic¬
ture exhibiting or projecting machine not capable

( Complaint .)

of exhibiting or projecting, by transmitted light,
motion pictures on a film of a width greater than
approximately one inch, or capable of exhibiting
or projecting motion pictures on film of any width,
but only with reflected light, and embodying one
or more of the inventions described and claimed
in letters patent numbers 578185, 580749, 58G953,
588910, 073329, 073992, 707934, 722382, 744251,
770937, 771280, 785205, and 785237, and made in
the United States, its territories and possessions,
by the licensee, should bo sold by the licensee,

65 except when sold for export, under the restric¬
tion and condition that said machine should be
used in exhibiting or projecting motion pictures
only in places to which no admission fee should
be charged; and that the licensee would attach
in a conspicuous place to every such machine a
plate showing not only the dates of the letters
patent under which suid machine was licensed,
but also the following words and figures:

“Patented. No.

“The sale and purchase of this machine

66 gives only the right to use it so long us this
plate is not removed or defaced and in places
to which no admission foe is charged.”

(g) In and by said license agreement, each li¬
censee further covenanted not to make or sell
repair parts for motion picture exhibiting or pro¬
jecting machines manufactured or imported and
sold by any other person, firm or corporation li¬
censed by the Patents Company to manufacture
or import and sell such machines under all or any
of the United States letters patent herein last
above mentioned by numbers; and further covc-

( Complaint .)

minted not to sell any exhibiting or projecting
machine at loss than the licensee’s list price, ex¬
cept to jobbers and other persons, firms or cor¬
porations for the purpose of resale, aiid that the
licensee would require such jobbers and other
persons, firms and corporations to sell such ma¬
chines at not less than the licensee’s list price,
except a discount of two per cent, for payment in
ton days; and further covenanted not to sell, nftcr
May 1, 1909, any exhibiting or projecting machine
capable of exhibiting or projecting by transmitted
light motion pictures on a film of a width greater 68
than approximately one inch, at a loss list price
than one hundred and fifty dollars ($150), which
might include various designated attachments,
and that complete machines might bo sold between
February 1, 1909, and May 1, 1909, at a less list
price than one hundred and fifty dollars ($150),
but only to persons, firms or corporations not en¬
gaged in the business of renting motion picture
films, and not for use in any permanent or fixed
place of exhibition. 1

(h) In and by said license agreement, it was
further agreed, that the Patents Company might 69
grant other licenses to manufacture or import
and sell exhibiting or projecting machines under
any or all of the United States letters patent
herein last above mentioned by numbers, said,
licenses to be in writing, and not to be granted or
continued under terms, conditions or stipulations
in any respect more favorable to such licensees
than those set forth in said license agreement,
except three named concerns,, including the defend¬
ant Edison Manufacturing Company and said
Ai-mat Company, none of which should pay

j0 ( Complaint .)

any royalties on machines embodying any
or all of the inventions described and claimed
in letters patent numbers 578185, 580719, 586953,
588916, 673992, 707931, and 722382, when such
machines should be sold bona fide for export, un¬
less such machines should also embody one or
more of the inventions described and claimed in
letters patent numbers 673329, 711251, 770937,
771280, 785205, and 785237, in which case a fixed
royalty for each such machine should be paid.

•pi (i) In and by said license agreement, it was
further mutually agreed, between tho Patents
Company and each licensee, that tho license agree¬
ment should take effect on February 1, 1909, and
continue until June 20, 1910, with the option to
the licensee to renew the agreement and license
thereafter from year to year upon the same terms,
conditions and stipulations, by giving notico to
the licensor on or before March 20th in each year,
beginning witji tho year 1910, and that thereupon
tho license should bo deemed renewed for tho
period of one year, beginning Juno 20th of the
year following such notice, and that such notico

72 might be given by the licensee during the life or
lives of each or all of the patents under which
the licensee was by said agreement licensed.

(j) In and by said license agreement, it was
further mutually agreed, that the agreement
might be terminated during the original term, or
any renewal period, if either party should know¬
ingly or through gross neglect or carelessness be
guilty of bread), violation or non-performauce
of its covenants, conditions and stipulations, re¬
sulting in substantial injury to the other party,

( Complaint .)

and should, for the period of forty days after
notice thereof from tho other party, persist there¬
in or fail to repair the same. Reparation, how¬
ever, within such period of forty days should not
prevent termination of tho agreement if thereafter
the guilty party should knowingly or through
gross neglect or carelessness be guilty of a second
breach, resulting in substantial injury to the other
party.

Eighth : The plaintiff further alleges, upon
information and belief, that each of said licensed
agreements has been renewed, pursuant to the
provisions thereof, from year to year, and is still
in full force and effect, and that tho intention
of tho Patents Company and said licensed manu¬
facturers is to continue said license agreements
in force and effect during tho life of the patent
owned by said Patents Company which is latest
to expire.

(a) Soon after this combination of licensed
manufacturers with said Patents Company was
formed, competition among said licensed manu¬
facturers ceased and they very substantially in¬
creased the prices theretofore prevailing for the
films made by them and have ever since main¬
tained such increased prices, and now intend a
further increase.

Ninth: Shortly after the organization of the
Patents Company, and in January, 1909, and
after the aforesaid combination between the
Patents Company and the licensed manufactur¬
ers had been effected, and the aforesaid patents
transferred to the Patents Company, and the

76 ( Complaint .)

aforesaid license agreements between tile Patents
"ompany and said licensed manufacturers bad
boon entered into, a meeting was called at tbe
Borough of Manhattan, City of New York,
by the Patents Company, and the afore¬
said licensed manufacturers, to which repre¬
sentatives of all the principal rental agencies
throughout the United States, about 120 in num¬
ber, including the plaintiff, were invited. A largo
number of such representatives, including a rep¬
resentative of the plaintiff, attended said ineet-

77 ing, and were then and there informed in outline
of the arrangements that had been effected be¬
tween the Patents Company and the licensed
manufacturers, and of the intention of said Pat¬
ents Company and licensed manufacturers to re¬
duce the number of rental agencies in the United
States, and to require all such rental agencies as
might be permitted to continue business to accept
licenses from said Patents Company, grunting
such rental agencies the privilege of leasing, but
not purchasing, films from the licensed manufac¬
turers, and no others, and in turn of leasing such
films and licensed machines and apparatus to such

7 exhibitors throughout the United States and Can¬
ada as should be licensed by said Patents Com¬
pany, and as would agree not to use any other mo¬
tion picture films than those manufactured by the
licensed manufacturers under the license of the
Patents Company, or any other exhibiting or pro¬
jecting machines or apparatus than those licensed
by the Patents Company, and would pay a license
fee to said Patents Company on each machine.
Further requirements on the part of the exhibi¬
tors, as hereinafter stated, were required to be
exacted by the rental agencies.

( Complaint .)

(a) The representatives of said rental agencies
protested against the scheme ns unjust and op¬
pressive; but the representatives of the Patents
Company and of the licensed manufacturers in¬
sisted that the rental agencies must choose be¬
tween accepting licenses from the Patents Com¬
pany and operating under the restrictions there,
by imposed, or retiring from the motion picture
business altogether. Thereupon, after much dis¬
cussion, the rental agencies, being helpless and
unable to obtain satisfactory films or apparatus,
except by the means dictated by the Patents Com¬
pany and the licensed manufacturers, reluctantly
acquiesced, and a considerable number of such
rental agencies throughout tho United States, in- '
eluding the plaintiff, accepted license agreements,
identical in terms, from the Patents Company.

(b) Tho number of rental agencies in the Bor¬
ough of Manhattan, City of New York, was ar¬
bitrarily reduced by tho Patents Company and
tho licensed manufacturers from upwards of
twonty to nine, the Patents Company, with the
concurrence of the licensed manufacturers, refus¬
ing to license more than nine agencies in said
Borough of Manhattan; and the Patents Company
and the licensed manufacturers largely reduced
Urn number of rental agencies throughout the
United States, by refusing to license a number of
such rental agencies with which tho licensed man¬
ufacturers had theretofore dealt for a number of
years. The number of agencies in the United
States was reduced from about one hundred and
twenty to about seventy-five.

Tenth: Thereupon, on January 20, 1909, an
agreement, known as an “Exchange License

( Complaint .)

Agreement,” was entered into between the plain¬
tiff and the defendant Patents Company. A copy
of said agreement, marked Exhibit A, is hereto
annexed and made part of this complaint. At andV
before the time of the execution of said Exhibit;

A, it was mutually understood and agreed, bc-V
tween the plaintiff and the defendant Patents' ;
Company, that said license agreement, Exhibit1 i
A, should continue during the unexpired term of
reissued letters patent number 12192, unless
sooner terminated for causo, pursuant to the
provisions of Paragraph 19 of said agreement.

(a) The plaintiff entered into said license
agreement under compulsion, because it could not
otherwise obtain licensed machines or licensed
film, both of which wore essential to its business.

The plaintiff further alleges, upon information
and belief, that while certain unlicensed manufac¬
turers wore and are engaged in producing both
machines and film, most or all of such machines
have failed to comply with the requirements of the
New York Board of Underwriters and of the De¬
partment of Water Supply, Gas and Electricity of
the City of New York, and therefore cannot
legally be used in public exhibitions in the City of
Now York, The films produced by such unli¬
censed manufacturers were, and still are, inferior,
both in range of subjects and in perfection of the
scenes photographed, to the films produced by the
aforesaid licensed manufacturers; the unlicensed
films have not. until recently, been produced in
quantities sufficient for the plaintiff’s business; : jl
and there has been, and still is, litigation in the if

Circuit Courts of the United States between the -If

Patents Company, as complainant, and the un- |j

( Complaint .) 85

licensed manufacturers of machines and films,
ns defendants, in which it has boon and is con¬
tended by the complainant that the machines
and films produced by said unlicensed manufac¬
turers infringe some or all of the aforesaid pat¬
ents now owned by the Patents Company, and it
never has been, since December, 1908, null is not
now, safe or commercially practicable for the
plaintiff or other rental agencies, to use either the
machines or the films produced by said unlicensed
manufacturers, not only because such use would
involve tho users in litigation, but because, if the 86
claims of the Patents Company should be sus¬
tained, the supply of unlicensed machines and
films would bo cut off.

( b ) In addition, the films produced by the un¬
licensed manufacturers have acquired no such
degree of popularity as those produced by
the licensed manufacturers, who, owing to the
greater length of time during which they have
carried on tho business, have perfected their
organization and methods of production to a de¬
gree not vet reached by the unlicensed manufac¬
turers. The substitution of films produced by §7
independent manufacturers would greatly preju¬
dice the plaintiff’s business and largely reduce its
profits. The plaintiff has extensively advertised
the superiority of the films produced by the licens¬
ed manufacturers over the unlicensed films, and
has educated a large clientele patronizing a num¬
ber of theatres in tho City of New York and else¬
where in the State of New York and in other
States, which are supplied with film by the plain¬
tiff, to the superiority of said licensed films, and
the failure of tho plaintiff to furnish such licensed

(Complaint.)

films and any attempt to deal in unlicensed films
would result in practically the complete loss of the
patronage of its present customers.

Eleventh : Tile plaintiff, ever since its organ¬
ization, has carried on the business of a renlul
agency, and has supplied machines and film to a
largo number of licensed exhibitors in the City of
New York, elsewhere in the State of New York,
and in the States of New Jersey, Connecticut and
Massachusetts. The plaintiff supplies films to
89 ten of the largest, best equipped and best patron¬
ized motion picture theatres in the City of Now
York, and which exhibit motion pictures to three
hundred and fifty thousand (350,000) people in
every week; and, in addition, to about ninety (90)
other motion picture theatres in the City of New
York, as well as to similar exhibitors in various
places in the other States mentioned.

(a) The plaintiff has a largo investment in its
plant and property, and has established a valu¬
able good-will, all of which will bo rendered worth¬
less, if, by the threatened action of the defendants,
9° the plaintiff should be unable lo continue its busi¬
ness and supply licensed films as heretofore.

Twelfth: One of the conditions of the plain-
I tiff’s aforesaid license agreement, Exhibit A, is

I that prescribed by Paragraph 9, to the effect that

I the plaintiff should, without receiving any pny-
I meat therefor, return to each licensed manufac-
( hirer or importer, on the first day of every month,
commencing seven months after February 1, 1909,

( Complaint .)

the equivalent amount of positive motion picture
film in running feet (not purchased or leased over
twelve months before), and of the make of such
licensed manufacturer or importer, equal to the
amount of licensed motion pictures that was so
leased during the seventh month preceding the
day of each such return; and, pursuant to said
requirement, the plaintiff has from time to time,
since September, 1909, without receiving any com¬
pensation, returned large quantities of positive
motion picture film to the defendants herein
designated as licensed manufacturers, which the
plaintiff had purchased and owned outright, of
an actual value of upwards of one hundred thou¬
sand dollars ($100,000), and the purchase price
of which was upwards of three hundred thousand
dollars ($300,000).

Thirteenth : The plaintiff has duly performed
all the conditions of the aforesaid license agree¬
ment, Exhibit A, on its part to be performed.

Fourteenth : The Patents Company, in addi¬
tion to the royalties paid by the licensed manufac¬
turers, as hereinbefore set forth, has received from 93
or through each licensed rental agency, pursuant
to the provisions of paragraph 12 of said license
agreement, Exhibit A, a license fee of two dollars
per week for each licensed projecting machine
used by each licensed exhibitor. The plaintiff has
paid to said Patents Company during the exis¬
tence of the agreement, Exhibit A, upwards of
Thirty thousand dollars ($30,000) for such license
foes required to be paid by exhibitors. In prac¬
tice such exhibitors usually refused to pay such
license fees, and plaintiff was compelled to pay ■

(Complaint.)

the same. The plaintiff further alleges, upon in¬
formation and belief, that since January, 1909,
said Patents Company has received in license
fees paid by virtue of similar provisions, under
license agreements like Exhibit A, upwards of
One million dollars ($1,000,000).

Fifteenth: The plaintiff further alleges, upon
information and belief, that at or about the same
time when the aforesaid license agreements wore
made between the Patents Company and the li-
95 censed manufacturers, a separate agreement was
made and entered into between said Patents Com¬
pany and said licensed manufacturers, by which
for divers valuable considerations said licensed
manufacturers undertook and agreed to and with
said Patents Company that they, the said licensed
manufacturers, would supply to all rental agen¬
cies licensed by said Patents Company, all films
manufactured by said licensed manufacturers re¬
spectively, on payment by such licensed rental
agencies of the prices fixed by said licensed man¬
ufacturers. The plaintiff further alleges, upon
information and belief, that the said last-mon-
9 tinned agreement over since has boon and still
is in full force and effect and was made by the
parties thereto for the benefit of such rental agen¬
cies, including the plaintiff, as might be licensed
by said Patents Company, and to assure to said
licensed rental agencies a source of supply of the
aforesaid films, without which it would' bo impos¬
sible for such rental agencies to carry on business.

(a) The plaintiff further alleges, upon informa¬
tion and belief, that at or about the same time as
said last-mentioned agreement was made between

(Complaint.)

said Patents Company and said licensed manufac¬
turers, said Patents Company licensed cortain
manufacturers of projecting machines to manu¬
facture the same and sell them to licensed
rental agencies and licensed exhibitors, and
entered into an agreement with said manu¬
facturers, so licensed, of such projecting
machines, whereby the latter undertook and
agreed to and with said Patents Company, for the
benefit of rental agencies and exhibitors licensed
by said Patents Company, to furnish projecting
machines to such licensed rental agencies and 98
licensed exhibitors on payment of the price exact¬
ed by said manufacturers for said machines.

(l>) The manufacturers of projecting machines
licensed by said Patents Company were limited to
thirteen in number, although there were n number
of other manufacturers of such machines, and each
of the manufacturers so licensed agreed to pay a
royalty to said Patents Company upon each ma¬
chine manufactured and sold. The effect of such
agreement with said manufacturers of projecting
machines was to limit the source of supply of said
machines and to aid the Patents Company in 99
effectuating a monopoly of the motion picture
business in all its branches. In fact, only five of
the thirteen manufacturers so licensed ore manu¬
facturing or selling such machines.

Sixteenth: The plaintiff ever since the execu¬
tion of the license agreement, Exhibit A, has
leased films from the defendants herein designated
as licensed manufacturers, and all of the plain¬
tiff’s orders have hitherto been promptly executed
and it has received in each week since January 20,

( Complaint .)

1909, from eighteen to thirty-six reels of film con¬
taining photographs of new scones or subjects,
that quantity being the maximum output of the
combined licensed manufacturers, and tho plain¬
tiff in turn has leased such film to various licensed
exhibitors as hereinbefore mentioned.

Seventeenth: Tho Patents Company in the
early part of 1909 licensed nine rental agencies
in tho Borough of Manhattan, City of Now York,
under license agreements in all respects similar
to tho aforesaid agreement, Exhibit A, made with
tho plaintiff. Thereafter tho defendant General
Film Company was organized on or about April
21, 1910, for tho purpose of carrying on tho busi¬
ness of a rental agency; and tho plaintiff alleges,
upon information and belief, that said company
was organized and is controlled by said Patents
Company and said licensed manufacturers, and
that said General Film Company and said Patents
Company and said licensed manufacturers have
common officers and directors, to wit:

Frank L. Dyer, President of Edison Manufac¬
turing Company; President of tho Patents Com¬
pany; Director of the General Film Company;

H. N. Marvin, President of American Muto-
scope and Biograph Company; Vice-President of
the Patents Company;

J. J. Kennedy, Vice-President of American
Mutoscope and Biogrnpli Company; Treasurer of
the Patents Company; President of the General
Film' Company;

I ( Complaint .) I0-

j William Pelzer, Manager of a branch of the
| Edison Manufacturing Company; Secretary of
| tho Patents Company ;

| J. A. Burst, a Director of Pnthe Froros; Troas-
,3 urer of tho General Film Company;

' Albert E. Smith, Treasurer of Vilagraph Com-
| puny of America; Director of the General Film
Company.

3; Tho Board of Directors of said General Film ioq
% Company is composed of the following: Frank
L. Dyer, George K. Spoor, Samuel Long, George
Jf Kleino, Siognnmd Lubin, J. A. Berst, W. N. Selig,
Albert E.. Smith and J. J. Kennedy ; of whom, in
jf addition to those already mentioned, said Spoor
| is an officer and director of the defendant Essanay
| Film Manufacturing Company, one of the licensed
!| manufacturers; said Long is an officer and di¬
ll rector of tho defendant Kalem Company, one
$ of the licensed manufacturers; said Kleine
| is a licensed manufacturer; said Lubin is Presi-
I dent and a director of tho defendant Lubin Manu¬
facturing Company, one of the licensed manufac- I05
turers ; and said Selig is President and a director
of tho defendant Selig Polyscope Company, one
of the licensed manufacturers.

(a) The plaintiff further alleges, upon informa¬
tion and belief, that the said General Film Com¬
pany was organized as a part of and in further¬
ance of the combination and conspiracy to obtain
control of and to monopolize all branches of the
motion picture business and to restrain trade and
commerce therein among the several States and

(Complaint.)

with foreign nations ; and tlmt in furtherance of
said object the licenses of two of the aforesaid
nine licensed rental agencies formerly existing in
the Borough of Manhattan, City of Now York,
wore arbitrarily cancelled by said Patents Com¬
pilin' and the business thereof transferred to said
General Film Company, and of the remaining
seven rental agencies the business and good will
of six wore purchased by' said General Film Com¬
pany, the owners of said rental ngencies being
coerced into making such sales by the arbitrary
cancellation or threats of arbitrary cancellation
of their licenses by the Patents Company, and
said General Film Company has continued and
carried on the business of said purchased rental
agencies.

(h) The plaintiff further alleges, upon informa¬
tion and belief, that prior to November 14, 1911,
in furtherance of the aforesaid combination and
conspiracy to obtain control of the motion picture
business and to vest the control of the leasing nnd
subleasing of films in United States in said
General Film Company, said Patents Company
arbitrarily cancelled the licenses of a number of
licensed rental agencies doing business in various
parts of the United States, and by means of
threats of such arbitrary cancellation compelled
the sale of the business and good will of the re¬
maining licensed rental agencies, except the plain¬
tiff, to said General Film Company, which suc¬
ceeded to and acquired and has ever since car¬
ried on the business of all of said licensed rental
agencies so forced out of existence.

(Complaint.)

and the plaintiff further alleges, upon informa¬
tion and belief, that said General Film Company
supplies film for upwards of five hundred (500)
motion picture theatres in the City of New York,
which were formerly supplied by the aforesaid
nine licensed agencies.

Eighteenth : Several months prior to Novem¬
ber 14, 1911, the defendants Patents Company
and General Film Company urged the plaintiff to
sell to said General Film Company its business
and good will nnd offered to pay One hundred
thousand dollars ($100,000) therefor, provided
the plaintiff would surrender its aforesaid license
agreement, Exhibit A, which offer the plaintiff
refused.

(a) On November 14, 1911 the defendant Pat¬
ents Company served upon the plaintiff a notice
of which the following is a copy :

“Motion Picture Patents Company,

80 Fifth Avenue, New York.

November 14th, 1911.

Greater New York Film Rental Company,
116 East 14th Street,

New York City.

Pursuant to the right reserved by this
Company under the first clause of Section
Nineteen of the Conditions of License form¬
ing a part of the Exchange License Agree¬
ment existing between you nnd this 'Com¬
pany, and bearing date of the twentieth day
of January, Nineteen hundred and nine, we

( Complaint .)

hereby notify of our intention to terminate
said licenso nnd Hint the same will terminate
nt eight o’clock A. M. on Monday the fourth
day of December, Nineteen hundred and
eleven, unless sooner terminated by this
Company for any broach of the conditions of
said license.

Yours truly,

Motion Piotuhk Patknts Company,

By II. N. Maiivin

Vice-President.”

(b) Thereafter a conference was had between
the President of tbe' plaint i IT and the aforesaid
.T. A. Borst, a director of the defendant Pa the
Frores, and Treasurer of said General Film
Company. Said Borst informed the President of
the plaintiff that the reason for the aforesaid
notice of cancellation was that the Patents Com¬
pany and the licenod manufacturers and the Gen¬
eral Film Company had determined to increase
the price to be charged by said licensed manu¬
facturers for film, and that so long as the plain¬
tiff held its license such price could not be increas¬
ed and said licensed manufacturers could not ob¬
tain complete control of the motion picture busi¬
ness, which they desired to obtain. Said Borst fin¬
ally undertook, if the plaintiff would surrender its
license without opposition, to attempt to influence
his associates in the Patents Company and the
General Film Company to make an offer to the
plaintiff for the purchase of its business and good
will.

(c) Shortly thereafter at a conference between
tbe plaintiff’s President and tbe aforesaid J. J.
Kennedy, Treasurer of the Patents Company and

( Complaint ,)

President of said General Film Company, said
Kennedy, acting, the plaintiff alleges, upon infor¬
mation and belief, in behalf of both of said com¬
panies and of said licensed manufacturers, after
first insisting that the plaintiff hud nothing to sell,
inasmuch as its license had boon cancelled, fin¬
ally offered to reinstate said license and to pay
the plaintiff Ninety thousand dollars ($90,000)
for its business nnd good will, provided the same
should bo transferred to the General Film Com¬
pany together with the lease of the premises oc¬
cupied by tbe plaintiff at 11G East 14th Street in
the Borough of Manhattan, City of New York, on
or before eight A.M. on December 11, 1911. The
plaintiff’s President suggested that such papers
as wore desired by Mr. Kennedy to be executed
by the plaintiff, bo prepared and sent to the plain¬
tiff for examination by its counsel, nnd thereupon
said Kennedy telephoned to tbe aforesaid II. N.
Marvin and directed him to send to tbe plaintiff
a notice of withdrawal of the notice of cancella¬
tion of November 14, 1911.

(d) Thereafter, on or about December 2, 1911,
the plaintiff received from said Patents Company
a notice of which the following is a copy :

“Motion Ptctuiie Patents Company
80 Fifth Avenue, Now York.

December 1st, 1911.

Gkeateh New Yoiik Film Bental Company,
110 East 14th Street,

New York City.

Gentlemen:

Referring to our letter of November 14th,
notifying you of our intention to terminate

( Complaint .)

your license on the fourth day of December,
Nineteen hundred and eleven, wo hereby no¬
tify you tlmt said notice of termination is
hereby withdrawn.

Tours truly,

MoTrON PlCTUKE PATENTS COMPANY,

By H. N. Marvin Vico Pres.”

(c) Thereafter on or about December 7, 1911,
the plaintiff notified said Kennedy that it would
not sell its business or surrender its license, and
immediately thereafter the plaintiff received from
said Patents Company a notice of which the fol¬
lowing is a copy :

“Motion Pictuue Patents Company,

80 Fifth Avenue, Now York.

December 7th, 1011.

Cheater New York Film Dental Company,
110 East 14th Street,

New York City, N. Y.

Gentlemen :

Pursuant to the right reserved by this Com¬
pany under the first clause of Section Nine¬
teen of the Conditions of License forming
part of the Exchange License Agreement
existing between you and this Company and
hearing date the eighteenth day of January,
Nineteen hundred and nine, avc hereby notify
you of our intention to terminate said license
and that the same will terminate at eight,
o’clock A. M. on Monday the twenty-fifth day
of December, Nineteen hundred and eleven,
unless sooner terminated by this Company
for any breach of the conditions of said
license.

Yours truly,

Motion Picture Patents Company,
By II. N. Marvin, Vico President."

(J) The plaintiff further alleges, upon informa¬
tion and belief, that tho threatened cancellation
of the plaintiff’s license is a part of the aforesaid
conspiracy among tho defendants to restrain
trade and commerce among the several states
and with foreign nations in tho motion picture
business and particularly in the supply of films
and apparatus, and to monopolize and obtain
complete nnd exclusive control of tho motion pic¬
ture business in the United States and Canada.

Nineteenth.— The plaintiff further alleges,
upon information and belief, that tho defendants,
oven if restrained from cancelling the plaintiff’s
license, will seek to accomplish the same object
and eliminate the plaintiff from the motion pic¬
ture business by means of withholding from the
plaintiff the supply of films which it has hereto¬
fore received from the licensed manufacturers, or
to cripple and destroy tho plaintiff’s said business
by discriminating against tho plaintiff in supply,
ing snob film. It is essential to the success of the
plaintiff’s business that films containing photo¬
graphs of new scenes and subjects be promptly
supplied by said licensed manufacturers, without
discrimination, as heretofore, in order that it may
be able to compete with the General Film Com¬
pany in the distribution of such films to exhibitors.

Twentieth : The plaintiff further alleges, upon
information and belief, that the defendants’
threatened refusal to deal with the plaintiff and
to supply it with films produced by the licensed
manufacurers under patents owned by the de¬
fendant Patents Company, is in violation of the
duty owing by the defendants to the plaintiff, and

124

( Complaint .)

to the public generally, and in violation of the
plaintiff’s contract rights, by virtue of the plain¬
tiff's aforesaid license, Exhibit A, and the other
contracts mentioned in this complaint; and that
the organization of the defendant Patents Com¬
pany, and the assignment to it of the aforesaid
letters patent, and the licenses and agreements
existing between said Patents Company and
said licensed manufacturers, and the organization
of the defendant General Film Company, nnd
its control by said Patents Company and said
125 licensed manufacturers, and the methods ot busi¬
ness pursued by all the defendants, constitute a
contract, combination and conspiracy in restraint
of trade and commerce among the several States
nnd with foreign nations, nnd an attempt to mo¬
nopolize, nnd a combination nnd conspiracy among
all the defendants to monopolize, the trade and
commerce among the several States and with
foreign nations in motion picture apparatus and
films and in the motion picture business general¬
ly; nnd that such contract, combination nnd con¬
spiracy and attempt' to monopolize are in viola¬
tion of an Act of Congress of the United States,
I2® approved July 2, 1890, commonly known as the
Sherman Anti-Trust Act, which provides as fol-

“ Section 1. Every contract, combination
in the form of trust or otherwise, or con¬
spiracy, in restraint of trade or commerce
among the several States, or with foreign
nations, is hereby declared to be illegal.
Every person who shall make any such con¬
tract, or engage in any such combination or
conspiracy, shall be deemed guilty of a mis¬
demeanor, and, on conviction thereof, shall
bo punished by fine not exceeding five thous-

( Complaint .)

and dollars, or by imprisonment not exceed¬
ing one year, or by both said punishments,, in
the discretion of the court.

“Section 2. Every person who shall mo¬
nopolize, or attempt to monopolize, or com¬
bine or conspire with any other person or
persons to monopolize, any Dart of the trade
or commerce among the several States, or
with foreign nations, shall bo doomed guilty
of a misdemeanor, and, on conviction thereof,
shall he punished by fine not exceeding five
thousand dollars, or by imprisonment not
exceeding one year, or by both said punish¬
ments, in tbe discretion of tbe court.”

■f

■a

■X

(a) The plaintiff has heretofore, since January
20, 1901), dealt and still continues to deal with all
of the defendants designated ns licensed manu¬
facturers, and 1ms leased largo quantities of films
from each of them, and uninterrupted continuance
of the supply of such films from each of said de¬
fendants is essential to the plaintiff’s business.
Said defendants, the licensed manufacturers, will
out off the plaintiff’s supply of films if the plain¬
tiff’s license should be cancelled, or, even without
such cancellation, if instructed so to do by said
Patents Company, or by agreement among them¬
selves for the purpose of forcing the plaintiff
to retire from business as a rental agency. It
wdll be impossible for the plaintiff to secure ade¬
quate service from the licensed manufacturers,
such ns the plaintiff requires for the successful
carrying on of its business, nnd such as it has
heretofore had, without the aid of the injunction
of this Court.

■3°

( Complaint .)

mieos herein set forth and is rolievable only in a
court of equity where matters of this sort are
properly cognizable and reliovnblo. The plain¬
tiff’s damages cannot bo mousui'od in money or
ascertained at law.

Whehbkoub, tho plaintiff prays for a docroo :

(z) Restraining the • defendants, and each of
them, and their and each of their officers, direc¬
tors, attorneys, agents and servants, during tho

131 life of reissued letters patent number .12192, from
interfering with the plaintiff's business, or from
discriminating against it, or from censing to sup¬
ply tho plaintiff, without delay or discrimination,
with motion picture films produced by tho defend¬
ants, designated ns licensed manufacturers, re¬
spectively, upon the plaintiff’s orders, upon tho
plaintiff’s paying for such films and continuing to
perform tho conditions of its license, Exhibit A;
and enjoining and restraining said defendants,
tboir officers, directors, attorneys, agents and ser¬
vants, from in any wise altering, to the plaintiff’s
prejudice, in completeness and promptness of sor-

132 v'uoi or otherwise* the methods of business hereto¬
fore and now prevailing between the plaintiff and
tho defendants designated as licensed manufact-

(5) Enjoining and restraining the defendants,
and each of them, and their and each of their offi¬
cers, directors, attorneys, agents and servants,
from taking from the plaintiff’s possession or
that of any customer or exhibitor, or in any wise
interfering with, by means of actions of replevin,
or otherwise, any' of the film possessed by tho

( Complaint .)

plaintiff ; and restraining tho defendants, and par¬
ticularly tho General Film G'ompuny, its officers,
directors, attorneys, agents and servants, from
interfering with the plaintiff’s business or cus¬
tomers, and from attempting to alienate or entice
said customers from the plaintiff';

(if) Enjoining and restraining the defendant
Patents Company, its officers, directors, attorneys
and agents, during tho life of said reissued let¬
ters patent number 12192, from cancelling or at¬
tempting to cancel the plaintiff’s license, Exhibit
A, or from in any wise interfering with tho plain¬
tiff’s business) or from requiring or inducing the
defendants designated as licensed manufacturers,
or any of them, to cut off’, limit, or in any wise
make loss efficient than heretofore, the supply of
films by said licensed manufacturers, respectively,
to the plaintiff, or from in any wise interfering
with tho business relations hitherto and now ex¬
isting between the plaintiff and said licensed man¬
ufacturers; and tho plaintiff prays that an order
may be made restraining the defendants as here¬
inbefore prayed, during the pendency of this
action.

(d) Declaring the plaintiff’s license in full force
and effect, and not subject to cancellation, except
for tho plaintiff’s breach of some condition or
stipulation in said license contained, during the
life of said reissued letters patent number 12192;

(/>) Declaring void and of no effect the attempt¬
ed cancellation of said license made by the defend¬
ant Patents Company on December 7, 1911;

136 ( Complaint .)

(ff) For such other, further or different relief
in the promises ns may bo agreeable to equity and
seem moot to the Court; besides the costs of this
action.

Rogers & Rogers,

Attorneys for Plaintiff,

Office and Post Office Address:

No. ICO Broadway,
Borough of Manhattan,

New York City.

'37 Samuel Untermyer,

Of Counsel.

Stale and County of New York, ss. :

'38

William Fox, being duly sworn, says :

,.I n,!1.nil°n'cel'> to "’it’ President, of the plain-
till, which is a domestic corporation.

I have road the foregoing complaint and know
the contents thereof, and the same is true of my
own knowledge, except as to the matters therein
stated to be alleged upon information and belief,
and as to those matters I believe it to be true.

William Fox.

.16th1 day' "of
Rap

before me
December, 1

this)
1911. (

Notary Public,

New York County.

(Cc 1 1 t—i rut a.) ,3g

Exhibit A.

Exoiiangb License Agreement.

Whereas, the Motion Picture Patents Com¬
pany of New York City (hereinafter referred to
as the “Licensor”) is the owner of all the right,
title and interest in and to reissued Letters Pat¬
ent No. 12,192, dated .January 12, 1902, granted to
Thomas A. Edison, for Kinetoscopic Film, and
also Letters Patent Nos. 578,180, 080,749, 580,953,
588,910, 073,329, 073,992, 707,934, 722,382, 744,- 140

251, 770,937, 771,280, 785,205 and 785,237, for in¬
ventions relating to motion picture projecting ma¬
chines; and

Whereas, The Licensor has licensed the Amer¬
ican Mutoscopo and Biograph Company of New
York City, the Edison Manufacturing Company
of Orange, Now Jersey; the Essanny Company of
Chicago; the Kalom Company of New York City;
George Kleino of Chicago; Lubin Mnnufacuturing •
Company of Philadelphia; Pa the Frores of New
York City; the Selig Polyscope Company of Chi¬
cago; and the Vitagraph Company of America, of '4'
New York City, (hereinafter referred to ns “Li¬
censed Manufacturers or Importers”) to manu¬
facture or import motion pictures under the said
reissued Letters Patent and to lease licensed mo¬
tion pictures (hereinafter referred to as “Li¬
censed Motion Pictures”) for use 011 projecting
machines licensed by the Licensor; and

Whereas, the undersigned, (hereinafter referr¬
ed to ns the “Licensee”) desires to obtain a li¬
cense under said reissued Letters Patent No. 12,-

,ll

( Complain I — Exh i bit A.)

192, to lease from the Licensed Manufacturers
and Importers licensed motion pictures ami to
sub-let the said licensed motion pictures for use
on projecting machines licensed by the Licensor;

Now, therefore, tub partiijs HERETO, in consid¬
eration of tiie covenants herein, have agreed as
follows :

(1) The Licensor hereby grunts to the Licensee
for the term and subject to the conditions express¬
ed in the “Conditions of License” hereinafter set
forth, tiie license, under the said reissued Letters
Patent No. 12,192, to lease licensed motion pic¬
tures from the Licensed Manufacturers and Im¬
porters and to sub-lease said license motion pic¬
tures for use only on projecting machines li¬
censed by the Licensor under Letters Patent
owned by it.

(2) The Licensee covenants and agrees to con¬
form with and strictly adhere to and be bound by
all of the “Conditions of License” hereinafter set
forth, and to and by any and all future changes in
or additions thereto, and further agrees not to do
or softer any ol the acts or things thereby prohib¬
ited, and that the Licensor may place and publish
the Licensee’s name in its removal or suspended
list, in the event of the termination of this agree¬
ment b.vtiie Licensor, or In' casooTnnyvrolnHon
thereof, and may direct the Licensed Manufac¬
turers and Importers not to lease licensed motion
pictures to the Licensee, the Licensee hereby ex¬
pressly agreeing that such Licensed Manufactur¬
ers and Importers shall have the right to cease
such leasing when so directed by the Licensor;

(Complaint— Exhibit A.) Ii)5

and the Licensee further agrees that the signing
of tins agreement constitutes a cancellation of any
or all agreements for the sale of licensed motion
pictures made prior to this agreement by and be¬
tween the Licensee and any or all licensed manu¬
facturers or importers, except as to any clause in
said agreements relating to the return of motion
picture film to the several licensed manufactur¬
ers or importers. It is further understood and
agreed by the Licensee that the license hereby
granted is a porsonal one and not transferrablo or
assignable, and the Licensee hereby recognises *4^
and acknowledges the validity of the suid reissued
Letters Patent No. 12,192.

Conditions of License.

1. From the date of this agreement the Licensee
shall not buy, lease, rent, or otherwise obtain any
motion pictures other than licensed motion pic¬
tures and shall dispose of any motion pictures only
by the sub-leasing thereof under the conditions
hereinafter sot forth.

2. The ownership of each licensed motion pic- '47
tore leased under this agreement shall remain in

the Licensed Manufacturer or Importer from
whom it may have been leased, the Licensee, by
the payment of the leasing price acquiring only
the license to sub-let such motion picture subject
to the conditions of this agreement. Such license
for any motion picture shall terminate upon the
broach of this agreement in regard thereto, and
the Licensed Manufacturer or Importer from
whom it may have been leased shall have the right
to immediate possession of such motion picture,

148 (Complaint— Exhibit A.)

without liability for any leasing price or other
sun), which the Licensee, or the person in whoso
possession said motion picture is found, may have
paid therefor.

3. The Licensee shall not sell nor exhibit li¬
censed motion pictures obtained from any Li¬
censed Manufacturer or Importer, either in the
United States or elsewhere, but shall only sub-let
such licensed motion pictures [and only for use in
the United States and its territories]* and only

149 to exhibitors who shall exclusively exhibit li¬
censed motion pictures, but in no case shall the
exhibitor be permitted to sell or sub-let or other¬
wise dispose of said licensed motion pictures.

4. The leasing price to be paid by the Licensee
to the Licensed Manufacturers or Importers, or
the terms of payment for or shipment of licensed
motion pictures, shall in no case bo loss or more
favorable to the Licensee than that defined in the
leasing schedule embodied in this agreement, or
any other substitute leasing schedule, which may
bo regularly adopted by the Licensor, and of which

*5° notice shall be given to the Licensee hereafter.

5. To permit the Licensee to take advantage of
any standing order leasing price mentioned in such
schedule, such standing order with any Licensed
Manufacturer or Importer shall bo for one or
more prints of each and every subject regularly
produced, and offered for lease' by such manu¬
facturer or importer as a standing order subject
and not advertised as special by such Licensed

(Com pi a in l—Exh ih it A. )

Manufacturer or Importer; and shall remain in
force for not less than fourteen (14) consecutive
days. Any standing order may be cancelled or
reduced by the Licensee on fourteen (14) days’
notice. Lxtra prints in addition to a standing
order shall be furnished to the Licensee at tko
standing order leasing price.

0. The Licensee shall not sell, rent, or otherwise
dispose of, either directly or indirectly, any li¬
censed motion pictures (however the same shall
have boon obtained), to any persons, linns or cor¬
porations or agents thereof, who may bo engaged
either directly or indirectly in selling or renting
motion picture films.

7. The Licensee shall not make or cause to be
made, or permit others to make reproductions or
so-called “dupes” of any licensed motion pic¬
tures, nor soli, rent, loan or otherwise dispose of
or deal in any reproductions or “dupes” of any
motion pictures.

8. The Licensee, shall not deliberately remove
the trademark or trade-name or title from any li¬
censed motion picture, nor permit others to do so,
but in case any title is made by the Licensee, the
Manufacturer’s name is to be placed thereon, pro¬
vided tlint in making any title by the Licensee, the
Manufacturer’s trademark shall not be repro¬
duced.

0. The Licensee shall return to each Licensed
Manufacturer or Importer (without receiving any
payment therefor, except that the said Licensed
Manufacturer or Importer shall pay the trans-

■54

( Com phi ill t — Exit ihi I .4.)

portalion charges incident to the return of the
sumo) on the first day of every month commenc¬
ing seven months from the first day of the month
on which this agreement is executed, an equiva¬
lent amount of positive motion picture film in run¬
ning feet (not purchased or leased over twelve
months before) and of the make of the said Li¬
censed Manufacturer or Importer, equal to tho
amount of licensed motion pictures that wus so
leased during the seventh month preceding tho
day of each such return with the exception, how-
155 over, that whore any such motion pictures are de¬
stroyed or lost in transportation or otherwise, and
satisfactory proof is furnished, within fourteen
(14) days after such destruction or loss, to tile
Licensed Manufacturer or Importer from whom
such motion picture was leased the Licensed Man¬
ufacturer or Importer shall deduct the amount so
destroyed or lost from tho amount to he returned.

10. The Licensee shall not sell, rent, sub-let,
loan or otherwise dispose of any licensed motion
pictures (however the same limy have boon ob¬
tained) to any person, firm or corporation in the
'5 exhibition business, who may have violated any
of the terms or conditions imposed by the Li¬
censor through any of its licensees and of which
violation the present Licensee may have had no¬

il. The Licensee shall not sub-lease licensed
motion pictures to any exhibitor unless a contract
with said exhibitor (satisfactory in form to the
Licensor) is first exacted, under which the exhi¬
bitor agrees to conform to all the conditions and
stipulations of the present agreement applicable

( Complaint — Exhibit A.) , ^

to tho exhibitor; and in the case of an exhibitor
who may operate more than a single place of ex¬
hibition, a similar contract shall ho exacted in
connection with each place so operated, and sup¬
plied with licensed motion pictures by the Li¬
censee.

12. -After February 1st, not), the Licensee shall
not sub-lease any licensed motion pictures to any
exhibitor unless each motion picture projecting
machine on which tho licensed motion pictures

are to bo used by such exhibitor is regularly li- ■ 58
censed by' tho Motion Picture Patents Com¬
pany, and the license fees therefor have been
paid; and the Licensee shall, before supplying
such exhibitor with licensed motion pictures,
mail to tho Motion Picture Patents Company,
at its office in New York City, a notice, giving the
name of tho exhibitor, tho name and location of
tho place of exhibition (and, if requested to do
so by tho Licensor, its seating capacity, hours of
exhibition and price of admission, and the num¬
ber and make of the licensed projecting machine
or machines), together with the date of the com¬
mencement of the subleasing, all in a form ap- 1 *9
proved by the Licensor. The Licensee, when
properly notified by the Licensor, that the license
fees of any exhibitor for any projecting machine
have not been paid, and that the license for such
projecting machine is terminated, shall immedi¬
ately cease to supply such exhibitor with licensed
motion pictures.

13. The Licensee agrees to order during each
month while this agreement is in force, for ship¬
ment directly to the place of business of the Li-

j gQ (Complaint— Exhibit A.)

conscc in the City for which this agreement is
signed, licensed motion pictures, the net leasing
prices for which shall amount to at least $2,000.

14. The Licensee shall, on each Monday during
the continuance of this agreement, make or mail
payment to each Licensed Manufacturer and Im¬
porter for all invoices for licensed motion pic¬
tures which have been received by tbo Licensee
during the preceding week.

1 6 ■ 15. This agreement shall extend only to the

place of business for the sub-leasing of motion
pictures maintained by tbe Licensee in the City
for which this agreement is signed, and the Li¬
censee agrees not to establish or maintain a place
of business for tbe sub-leasing of motion pictures,
or from which motion pictures are delivered to
exhibitors, in any other City, unless an agreement
for such other City, similar to the present agree¬
ment, is first entered into by and between the Li¬
censee and the Licensor.

1G. This Licensor agrees that before licensing

162 any person, firm or corporation in the United
States (not including its insular territorial pos¬
sessions and Alaska) to lease licensed motion pic¬
tures from Licensed Manufacturers and Import¬
ers and to sub-lease such motion pictures, it will
exact from each such licensee, an agreement sim¬
ilar in terms to the present agreement, in order
that all licensees who may do business with the
Licensed Manufacturers and Importers will be
placed in a position of exact equality.

(Complaint— Exhibit A.) ,63

If). It is understood and specifically covenanted
by the Licensee, that the Licensor may terminate
this agreement on fourteen (14) days written no-
tico to the Licensee of its intention so to do, and
that if the Licensee shall fail to faithfully keep
and perform the foregoing terms and conditions
of lease, or any of them, or shall fail to pay the
leasing price for any motion pictures supplied by
any Licensed Manufacturer or Importer when
duo and payable, according to the terms of this
agreement, tbo Licensor shall have the right to
place the Licensee’s name on an appropriate sus- 164
pended list, which the Licensor may publish and
distribute to its other licensees and to exhibitors
and to flic Licensed Manufacturers and Import¬
ers and to direct the Licensed Manufacturers and
Importers not to lease licensed motion pictures
to the Licensee, and the exercise of either or both
of these rights by the Licensor shall not ho con¬
strued us a termination of this license, and the
Licensor shall also have the right in such case,
upon appropriate notice to the Licensee, to im¬
mediately terminate the present license, if the
Licensor shall so elect, without prejudice to the
Licensor’s right to sue for and recover any dam- '®5
ages which may have been suffered by such breach
or non-compliance with the terms and conditions
hereof bv the Licensee, such breach or non-com¬
pliance constituting an infringement of said re¬
issued Letters Patent. It is further agreed by the
Licensee that if this agreement is terminated by
the Licensor for any breach of any condition here¬
of, the right to possession of all licensed motion
pictures shall revert twenty days after notice of
such termination, to the respective Licensed
Manufacturers and Importers from whom they

A rebate of 10% will bo allowed on all leases
ol licensed motion pictures, except at the 7 cent
and 5 cent prices, which are net; said rebates to
be due and payable between the 1st and loth days
of each of the months of March, May, July, Sep¬
tember, November and January, on all films leas¬
ed during the two months preceding each said
period, provided all the terms and conditions of
this license agreement have been faithfully ob¬
served.

(Complaint — Exhibit A.)

TERMS.

All shipments are made F. 0. B. lessor’s office
at lessee’s risk.

All motion picture films are to be shipped to
lessee’s office only.

The lengths at which motion picture films are
listed and leased are only approximate.

Motion Piotuiie Patents Company

By D. MacDonald, General Manager.

Licensee’s Signature

Greater New York Film Rental Co.

Secy.

Place of business for which this license is grant¬
ed Street and No. 24 Union Square

City New York State New York.

Date Jan.' 20/09.

SUPREME COURT,

NEW YORK COUNTY.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com-
pany nnd others,

'' Defendants.

State and County op New York — ss:

William Fox, being duly sworn, says :

I am President of the plaintiff in this action,
nnd linve rend tile accompanying complaint, veri¬
fied hy mo, nnd all the allegations therein con¬
tained, not stated to he made upon information
and belief, are true of my own knowledge.

I first became interested in the motion picture
1 74 business in 1900, as an exhibitor, and from time
to time acquired control of various motion picture
theatres, now numbering ton of the largest, best
equipped and best patronized, in the Boroughs of
Manhattan nnd Brooklyn, City of Now York, in
which motion pictures obtained from the defend¬
ants designated in the complaint as licensed manu¬
facturers have been and still are displayed to the
public.

The plaintiff was organized in March, 1907, for
the purpose of purchasing projecting machines
and films, and in turn leasing machines and films

( Affidavit of William Fox.) , 75

to exhibitors. The business of the plaintiff is
and ever since its organization has boon, that of a
rental agency, the nature of which is explained
in the complaint, and appears heroin.

From the time of its organization, until Jan¬
uary 20, 1909, when it perforce uecnptod the license
agreement, Exhibit A, attached to the complaint,
the plaintiff carried on its business hy purchas¬
ing outright both projecting machines and films,
and particularly the latter, from all the defend¬
ants heroin designated in the complaint as licens¬
ed manufacturers, except the Melies Manufnctur- ' 76
ing Company. Until about January, 1908, those
manufacturers were not “licensed manufactur¬
ers,” but were carrying on business independently
of one another, and there was active competition
among them. They sold both apparatus and films
outright, both to rental agencies and to exhibitors,
and served all comers without discrimination.

There were, also, other importers of foreign film
doing business in the United States, and the plain¬
tiff dealt with them prior to the early part of 1908,
when it was obliged to cease such dealings, owing
to the restrictions placed upon the rental agencies
by flic manufacturers when they combined under 177
the license of the Edison Manufacturing Com¬
pany, as next hereinafter stated.

In or about January, 1908, the defendants desig¬
nated in the complaint ns licensed manufacturers,
except the Melies Manufacturing Company and
George Ivloine and the American Mutoscope &
Biograph Company, accepted licenses from the
Edison Manufacturing Company to manufacture
under the patents owned and controlled by that
company. Theretofore, a number of those manu¬
facturers had been manufacturing, ns I under-

(Affidavit of William Fox.)

stand, under patents owned or controlled by thp
American Mutoscope & Biogrnph Company, or
without any licenses whatever, and in defiance of
the patents both of the Edison Company and] of
the Mutoscope Company.

There was much litigation between the Edison
Company and the Mutoscope Company, involving
also manufacturers under those respective pat¬
ents, and also rental agencies and exhibitors using
machines and, films claimed by the one company
or the other to be infringement's.

>79 After the aforesaid manufacturers accepted
Edison licenses, there was still active competition
on the part of Kleine, who was an importer , of
loreign films, and the Mutoscope .Company and
its licensees operating under its patents. There
was a number of manufacturers so operating
under the Mutoscope patents.

The manufacturers under the Edison license
refused to sell apparatus or, films to any agencies
or exhibitors that would not deal exclusively with
them. The Mutoscope Company and the manu¬
facturers operating under it's patents made no
j go such restrictions, and sold without discrimination.
The apparatus and films produced under the Edi-
son piilonts wore generally regarded as superior
to the others, and the result was that the manu¬
facturers under those patents acquired a largo
part of the business, although the rival manu¬
facturers were carrying on an extensive trade.

The prices of film produced by the manufactur-
-•■s undei the Edison license varied until about
Juno 1, 1908, when the Edison Company reduced
its price from 12 cents per running foot for imme¬
diate release film— meaning film to be used by all
of the rental ugencies throughout the United

(Affidavit pf William Fax.) ,g,

States on the same designated dale— to 9 cents
per running foot, loss 10 per cent if paid for
within one week after delivery. The Vitagraph
Company reduced its price for the same kind of
film from 10, 12 and 14 cents pur running foot to
9 cents per running foot, less 10 per cent if paid
for within one week after delivery. All the other
manufacturers under the Edison license made a
uniform price of 9 cents per running foot, loss
the 10 per cent rebate. Prior to June 1st, the
various prices had been net, without any rebate,
although the purchasers were required to pay for 182
the film either C. 0. D. or within one week, and
unless they did so no more film were shipped to
them.

The object of making the price 9 cents per run¬
ning foot, loss the 10 per cent rebate was to en¬
able these manufacturers operating under the
Edison license to control the business and drive
the other manufacturers and importers out of the
market. The cost of importing foreign film, after
payment of duly, was fully 8 cents per running
foot, and the price made by these licensed manu¬
facturers — 9 cents, less 10 per cent rebate —
brought their price down practically to the ac- 1 3
tunl cost of importing, or certainly of importing
and handling the foreign film. The result was,
that the Edison licensees acquired 85 or 90 per¬
cent of the whole business of the country.

In the summer or early fall of 1908, the advis¬
ability of a combination between the Edison li¬
censees and the American Mutoscope & Biograph
Company and its followers must have become ap¬
parent, and this was furthered by the active and
constant litigation between the Edison Company
and the Mutoscope Company over their patents.

1 84

(Affidavit of William Fox.)

Between June 1st nml September 1st, 1908, the
Edison licensees had so largely acquired the bus¬
iness of the film rental agencies and exhibitors
that they could and did, on September 1, 190S,
increase the price for their aforesaid film to 11
cents per running foot, with the same 10 per cent
discount.

It was staled by some of the manufacturers, at
a mooting of the film rental agencies in the sum¬
mer of 1008, that the Edison licensees would
make a uniform price of 9 cents, with the 10 per
185 cent rebate, for three months after .Tune 1, 1908,
for the purpose of driving the independents out
of the field. As has been stated, Hint purpose
was largely accomplished by September 1, 1908,
in that the rental agencies and exhibitors, to the
extent of 85 or 90 per cent of the whole number,
bought their film from the Edison licensees and
left the so-called independent manufacturers and
importers. Having accomplished their purpose,
the Edison licensees increased their price to 11
cents, loss 10 per cent, ns has boon staled.

The situation was ripe for a combination bo-
jgg tween the Edison licensees and their rivals, the
Mutosoopo Company and its followers, and the
result was the formation of the defendant Pat¬
ents Company in or about December, 1908. Since
that time, the uniform price of 11 cents per run¬
ning foot, loss 10 per cent rebate, has boon main¬
tained by the Patents Company for what are
known as standing orders; that is, the rental
agency is required to keep a standing order for
a certain number of reels of film per week with
some or all of the manufacturers, and this can be
cancelled only on two weeks’ notice. For film not
included in the standing order, the agency must

(Affidavit of William Fox.)

pay the list, price, which is, and has been since the
I ntents Company was formed, 13 cents per run-
ning loot, while betore the Patents Company was
formed it was 12 cents per running foot.

The difference with regard to films since the
combination is not only what has already been
mentioned, but that before the combination the
rental agencies became the absolute owners of
the film, and that; since the combination they are
mere lessees, but that, pursuant to the provisions
of the license agreement, like Exhibit A attached
to the complaint;, the agencies are required to re¬
turn the film to the manufacturers within' a com-'
pnrativcly short period, long before the life or
usefulness of the films has been exhausted. The
agencies, while thus paying the full value of the
.films, have only a restricted use of them, and the
supply is thus much curtailed..

Before the combination among the defendants
under the Patents Company was formed, there
wore about 120 rental agencies throughout the
United States buying apparatus and films from
the defendants now designated as licensed manu¬
facturers, and engaged in leasing such apparatus
and films, particularly the latter, to exhibitors.
About 20 of such rental agencies existed and car¬
ried on business in the Borough of Manhattan,
City of New York. After the combination was
effected, the defendant Patents Company refused
to license many of the existing rental agencies,
and reduced the number in the United States to
about 75, which received licenses from the Pat¬
ents Company, of which number 9 wore licensed
in the Borough of Manhattan.

Those 75 rental agencies have all, except the
plaintiff, been driven out of business by the do-

( Affidavit of William Fox.)

^y/(&

OKT,/'^ r

fondants sineo tho combination was effected. Of
tlio 9 licensed in the Borough of Manhattan, 2
/were eliminated by tlio arbitrary cancellation of
^ their licenses without cause, and without the pay¬
ment to the owners of anything whatever, and
the General Film Company succeeded to their
‘ business. Of the remaining 7, -the business and
good-will of 6 wore sold to the General Film
| Company on terms dictated by Mr. J. J. Kennedy
nnd his associates, including the licensed manu-
i lecturers, controlling tho Patents Company nnd
91 the General Film Company. The owners of those
agencies had practically no option about selling.
They were confronted with the alternative of ac¬
cepting tho terms offered them or suffering the
cancellation of their licenses theretofore granted
by tho Patents Company.

J B.v similar means, all the licensed rental
/ agencies existing in the United States outside of
tho Borough of Manhattan wore eliminated, some
by arbitrary cancellation of their licenses, and
others by juilaixxuljside to the General Film Com-
. pany under threats ot such cancellation.

x I «m well acquainted with most of the officers
>2 and directors of the Patents Company and the
General Film Company, and have had close
observation of they>hgain.es§jinitluicls for about
three years, and'-pknow wheroofj spoafc'N

A _ The defendant Parents Company was organ-
\ ized in or about December, 1908,’ and in that

'' 1 month t;he leading spirits in the Patents Com-

,J> > . P<any, viz. : Messrs. Frank U. ' Dyer, J. ,T.
• )/«.^'Ko,1,lec1y’ H- K Marvin, J. A. Borst, and George

P. .A

( Affidavit of William Fox.) |g3

Kleine, hold a meeting in the Borough of Man¬
hattan, City of Now York, with representatives
of all the defendants herein designated as licens¬
ed manufacturers, except tho Melics Manufactur¬
ing Company. The proceedings of that meeting
have since become notorious in the trade, and an
outline of the plan there evolved, couched, in
euphemistic terms, and without disclosure of all
the details, was afterwards stated to me and to
other representatives of rental agencies at a
meeting hold in New York a little later, to which
I shall presently refer.

At the first meeting m New York, the Patents
Company and tho licensed manufacturers entered
into agreements, by which all the patents owned
or controlled by the manufacturers, and which
are specified in the complaint, wore assigned to
the Patents Company, and tho licensed manufac¬
turers accepted identical licenses enabling them
to operate under said patents, the substance of
which license agreement is set forth in the com¬
plaint

It was also agreed at said meeting, by the Pat¬
ents Company and tho manufacturers, as is evi¬
dent from the terms of the licenses to rental '95
agencies, of which Exhibit A attached to tho com¬
plaint is a specimen, that tho prices for leasing
films should be fixed and maintained, and they
were fixed, and have ever since been maintained
at the sums stated in said Exhibit A, to wit :

( Affidavit of William Fox.)

Said prices, except the 5-cont and 7-ee.nt rates,
are subject to a rebate of 10 per cent payable be¬
tween the 1st and loth days of each of the months
March, May, .Inly, September, November and Jan¬
uary, on all films leased during the two months
preceding each said period, provided all the lorms
and conditions of the license agreement have been
faithfully observed.

Shortly after this first meeting another meet¬
ing was called in New York, which was attended
by representatives of all or nearly all the film
197 rental agencies in the United Stales and by repre¬
sentatives of all or nearly all of the defendants
dcsiiriiutcd as licensed manufacturers (except the
Melies Manufacturing Company, which was not
at that time in existence). I11 further reference in
this affidavit to the licensed manufacturers it
should bo understood that the Melies Manufac¬
turing Company is not included, but the George
Melies Manufacturing Company, n corporation
doing business in Chicago and engaged in manu¬
facturing film, is included. This meeting was
also attended bv a number ol the officers of the
Patents Company, including Dwight Macdonald,
'9° General Manager of the Patents Company.

The representatives of the rental agencies wore
informed that the .manufacturers of film and ma¬
chines laid all taken licenses from the Patents
Company and that films and machines would no
longer be sold outright, but only leased, and only
to such rental agencies as should bo licensed by
the Patents Compuny. Mr. Macdonald read the
license agreement which all rental agencies would
be required to sign. It was in all. respects like
Exhibit A attached to the complaint herein.

There was most vehement protest, on the part
ot the representatives of the rental agencies, but

( Affidavit of William Fox.)

it was useless and all attempts to secure modifica¬
tion of the provisions of the license agreement
were in vain, and wo all finally realized that our
only choice was either to accept the terms of the
license agreement or.g^oiit,of business. , . . • —

I objected vigorously to signing the agreement,
hut finally accepted it in hehalf of the plaintiff
because there was no alternative if the plaintiff
wished to continue business.

Ever since January 20, 1009 when said Exhibit
A was signed the plaint! tl has fully performed all
the terms and conditions of that agreement on
its part.

Pursuant to one of the provisions of the agree¬
ment the plaintiff has returned to the licensed
ni.nnu lecturers film which it had purchased out¬
right and paid for, and which hud cost the plain¬
tiff upwards of *:i0(),000, and which at the time r
of its return was fairly worth upwards of $100,- \
000. To bo sure, its market value had been de- '
stroyod by the action of the Patents Company • j
and the licensed manufacturers in prohibiting the
use of that film, but it was worth fully $100,000
for exhibition purposes if it; could have been used
or sold. :

Ill the early part of September, 10.1.1 I was
sent for by Mr. P. L. Waters, General Manager
of the General Film Company, and called upon
him at his office 111 the office of the General Film
Company, 200 Fifth Avenue, New York City.

1 remember our conversation quite distinctly,
and quote it ns nearly as I can recollect, in the
words used:

mt to advise you, in a friendly
iv is the right time to offer the

(Affidavit of William Fox.)

Grantor Now York Film Rental Exchange
for sale to tho General Film Company.”

“Wlmt do you moan by that'/ Why is this
tho right time any more than any time? I
lmvo no idea of soiling our business. Wo are
doing well enough.”

Ho said:

203 “Now, Fox, I want to bo your friend. You

know that I am tho General Manager of tho
General Film Company, and I know tho in¬
side workings, and my advice to you would
be to offer your plant for sale now, for if you
don’t you might never have another oppor¬
tunity.”

I said:

“Now, Waters, what do you mean by that?
Tf it is the idea of the General Film Com¬
pany and tho Motion Picture Patents Com¬
pany and tho manufacturers, to cancel my
license, of course I want to sell my plant anil
sell it quick. If you don’t contemplate job¬
bing me and cancelling my license, why then
I have no idea of selling and don’t want to
sell unless I can sell on the basis of the earn¬

ing capacity. My plant earning from $(>(),-
000 to $75,000 last year, I would expect any¬
where from $000,000 to $750,000.”

“Why”, ho said; “Don’t bo foolish. I
don t say that we are going to cancel vonr
license, and I don’t say that wo are goiii" to
.lob yoin, but I will advise you that if von
don t offer your plant for sale now, as I said
before, I don’t think you will get another

(Affidavit of William Fox.)

*nV- 0rs’ notJ l*o frank with me? If it

is tno idea ot your Company and tho Patents
Company to have my license taken away, why
i ca/fcoU g0t t0 t,l»° “lm0st nny P™° that

“Under the circumstances, you claiming
to bo my friend, try and get for mo $150,000.”

“N°w /ou aro 00mi,)S to J’o«r senses, ex-
S r i' V’0," are. asking too much monov,
but I think that this would bo a good time to
call in my friend J. J. Kennedy who, vou no
doubt know, is the President of tho General
n Jim Company, Treasurer of the Motion
iicture Patents Company and Vice-President
ot tlie American Mutoscope & Biograph Com- 207
pany. He, being the big man here in all of '
these companies, could talk to you officially
and whatever lie did would be upheld by the
various companies ho represents.”

He then brought Mr. Kennedy in. Mr. Ken¬
nedy said :

{Affidavit of William Fox.)

“Mr. Kennedy, the only tiling you can do
l'or me is to assure me that you don’t intend
to job mo by cancelling my license.’’

“I was speaking to
buying bis exchange f
Company. ’ ’

/ V jf

/A,

“Have you got a price in mind, Mr. Pox
as to wlmt you would like to have for yom
plant?” J

I repeated to Kennedy the exact conversation
that I bad with Waters in the first instance,
Kennedy said:

A “Of course you understand the selling of
/ your plant is not compulsory, and if you ex-
/ poet any such figures ns that, why go right
/ along and don’t bother about us; but if you
want oar figures I would bo glad to lot Vou
know bow much we think your plant is worth
and that is made up in table form, the exact
i t liA, P“Kl for every exchange that

''e bought throughout the country. These
of film f,™ mado "P recording to the amount
o film that you are buying and according to
the amount of customers that you have on
your books.”

(Affidavit of William Fox.)

. “Mr Kennedy, what are those fin-ares?

SSK-7" 1 “> ‘ -

Mr. Kennedy then took from his pocket a
1(3,101 1 :1 from that orand |0

up Ins figures on a pad, and said:

io bij ro o el a g o lie sa j basis
as wo have bought all of the others— and wo
have bought them all over the oountry-you
would be entitled to $85,000 plus ninety per
cent, of the price that you paid for the last
week pilot to out taking iiossession. which
would bviiig the figures up between $88,000
and $89,000. Ion know the having of these
plants is not all velvet. We have gone to

l9rnnoG!Titfl"7^,lclbo”sllt P'«»ta mid paid
$-.3,000 to $.0,000 for them and found that
they were running on a basis that they were
losing- $18,000 a year, and only by the com-
billed efforts oi this great big* corporation of
ours m being able to shift new customers into
that exchange and taking some of those that
\vere a great distance nwnv from that ex¬
change and taking care of them with one of
our exchanges nearer to that customer, wore
we able to put some of those plants on a pav¬
ing basis.”

“ ■f you paid anything like $25,000 or $30,-
000 for u plant that was losing $18,000 a
year, at your own figures any price that I
asked for mine, considering that it is making
between $(>0,000 and $75,000 a year, would
not be too large, because in mine you have a
manufactured business of a great earning
capacity and without it being controlled by

214

( Affidavit of William Fox.)

your great big corporation and without your
perfecting economies in it, that business,
' oven at a purchase price of $000,000 would
give you a not return of ton per cent.”

Kennedy said:

“Of course we are not buying on that basis
at all. Wo are only buying the plants that
are willing to sell for our price. Wo give
you the best price that we can afford to pay.
Wo give everybody the same price. Wo
make you this offer. You can either take it
or let it go.”

I said:

“Mr. Kennedy, if that is the best that you
can do of course I don’t want to sell. I hope
that I don’t find in the course of the next
week or month or two months, that you have
found some potty charge or other, under
which you will cancel my license in view of
the fact of my not wauling to sell today.’’

Mr. Kennedy said :

“If your license is cancelled. Pox, don’t
blame me. I am now talking for the Gen¬
eral Film Company, and the General Film
Company is not cancelling any license as von
know, your license comes from the Motion
1 icture Patents Company.”

“Mr. Kennedy, having in mind the close
• elat.onJnp between both companies, it will
bo a very easy matter 'for you to arrange to
Imve my license cancelled if yon see fit.”

o which lie replied:

I then bade Mr. Kennedy good-bye. Mr.
Wate. accompanied me downstairs to the cafe
of the Filth Avenue building, where he invited
me to have a drink with him, and said:

like van ,U « smart fellow

ike jou for whom I have had a high regard,
to be so stupid and not to be able to see the
conditions ns they have arisen. Remember
”"1® ^ wheel and you are only

a smnll chip 01 wood in the wav of it You
don t suppose that I, us the driver of my

ol°'Zn!!n’, ‘,"n r'1’]? !° s)vorvu n»y wheel out
oi the load. [ will be obliged to drive over
von every time I conic across you, and the

crush i7 ,0 tnllt ,tll,s ll01lv-v wlleo1 will soon
uush the small chip of wood to splinters.
„n°w’ Jl ' wore y°"’.L would take Kennedy’s
close friendship for you would
lend mo o say that I would lie glad to in-
ercedc with Mr. Kennedy in your behalf and
uy.to get you an even $100,000 for your
business.” *

I thank you Very much. I will think it
over, and I hope that, between now and the
time when I have thought it over, that I
don’t find that, you have been the cause of
having my license cancelled by the Patents
Company.”

That ended the interview.

I lmd no further conversation with anybody
representing the Patents Company or the manu-

(Affidavit of William Fox.)

facturors or the General Film Company until
after the plaintiff received the notice of cancel¬
lation dated November 14, 1911, set forth in the
complaint.

On November 17, 191.1, I telephoned Mr. Ken¬
nedy and made an appointment to call upon him
at his office on the next day (the 18th). I had an
interview with him on that day at winch he and
I were the only ones present. The conversation
was as follows :

I said :

“Mr. Kennedy, you no doubt are aware of
the fact that the Greater Now York Film
Rental Company received the cancellation of
its license on November 14th from the Motion
Picture Patents Company, which wus loft at
our office on Tuesday evening by a mes¬
senger. If I am informed correctly, the man¬
ufacturers had a meeting on Tuesday, No¬
vember 14th, and I suppose that at that
. mooting it was decided that my license
should bo cancelled.”

Mr. Kennedy said:

“You are absolutely right about that. We
did have a meeting on Tuesday, November
14th, and at that meeting it was decided that
your license should bo cancelled.”

“Of course, Mr. Kennedy, I am not sur¬
prised at this, because I have really been ex¬
pecting this over since I had my talk with
you at 200 Fifth Avenue some time ago.”

He said:

ubouHt’..i ‘W yOU t0 feGl that way
about it ut all. 1 don’t want you to think that
talk had anything to do witlftho eance.latio^
ot this license. In tact, to show you that I
, “”*"7 ,to b,u h'lu»dly and that I don’t

mint to light and scrap, I will be glad to open
our negotiations of before and see whether
l ean find some way of settling this up in a
nice, poacehil manner.’ *

Mr. Kennedy, I am glad to hoar you talk
that way. Having m mind that my license
lias been cancelled and after that goes into
e licet I have nothing to sell, I suppose I am
obliged to take almost anything that you
want to give mo.”

“No, I want you to put your price upon it.
I made you our oiler and you turned it down.
I want you to put your price upon it, and if I

‘ ‘ Mr. Kennedy, if you fool that way about it,
I asked $1150,000 the last time I was at your
office, having in mind that my license might
be cancelled. Now that it has boon cancelled
I will take $125,000. That is about $25,000
more than was offered to me at the time I
was down to see you, and surely $25,000 is
not so much to a great big company like

2*6 (Affidavit of William Fox.)

Ho said :

“If you are not ready to accept the price
that I originally offered you, and I don’t
remember exactly what that was, and if you
think yon ought to got $125,000, why then
leave the matter with me and I will ho glad
to take it up with our Executive Committee
and see ,pist wlint I can do for you. You can
expect; to hear from mo by next Tuesday.”

The interview then terminated.

22 7 1 made nn effort to get in touch with Mr. Ken¬

nedy by telephone on Tuesday, November 21st,

. and on every day of that week, and was alwavs
told at his office that ho was not in and they did
not know when to expect him. I left my tele¬
phone number and asked him to ho good enough
to call mo up, which ho did not do. I finally did
roach Mr. Kennedy about Monday, November
27lh, and ho told mo that ho had been unsuccess¬
ful in calling a mooting of the Executive Com¬
mittee and would make every effort to do so in a
day or so and would let mo hoar from him. Not
hearing from him on Tuesday, November 28th, I
22° asked Mr. Rosonbluh of our ofiico to call on one
of the Executive Committee, a Mr. .T. A. Berst,
who was also an officer of the Patlio Froros Com¬
pany, and asked him to arrange a meeting be¬
tween Mr. Berst and myself. On Tuesday after¬
noon, at 3 o’clock I called on Mr. Berst and told
him of the fact that I had been to see Mr. Ken¬
nedy on November 18th and that T loft with him
the price of $125,000, and Mr. Berst said:

“Of course there is whore you have made
a mistake. You know if you had taken the
price that Kennedy originallv offered vou

or if on your visit on November 18th vou
hud suid to Kennedy: ‘I will take wlint vnu
previously offered n,L tl c c 0 lo ,bWn
ny mind that Mr. Kennedy would have closed

but aslIIon°tlUn “P "'ith you nnd then,
but as long as you were looking for more
mono) than our schedule culled for, why, of
course lie would not ileal with you.”

Mr. Berst, I really came hero to ask you
to inttieede lor me, to have my license rein¬
stated, rather than to have the General Film 23°
Company buy me out, beeuuso 1 know of noth-
mg that I have done that could have offended
pj,. 1011 * lcture -Patents Company, or any
of their rules that I have violated so that they
would be justified in cancelling my license.”

ou don’t have to violate any of the rules
ot the Motion Picture Patents Company to
have your license taken away. Your exchange
is in the way ot the General Film Company.”

“If it was not for your exchange wo could
charge almost any price at all for licensed
motion pictures in Greater Now York and the
surrounding territory; but every time that
the General Film Company makes an effort
to raise the price of one of its customers it
finds that the customer has left the General

( Affidavit of William Fox.)

Filin Company and has gone with your con¬
cern to rent films.”

“Mr. Bersl, how can you make a statement
of that kind? You arc not the active man at
the General Film Company’s office.”

lie said :

^ Well, I am one of the Executive G'om-

233 / mittoe, and all of these matters are brought

j to my attention. You ought to be happy that
/ we did not cancel your license long before
I now, and if it were not for the fact that we
I all had a high regard for you we should have
I taken it away a year ago. We allowed you

I to reap the profits for a whole year so that

I when wo did take your license away or when
I we did offer to lniy you out you would feel
| that you got all there was in it for yourself,

j I suppose yon know that you are the last

/ j licensed film exchange in America today, and
that 111 itself ought to be enough compliment
to you, and really you ought not to put any
| obstructions in our way or make it harder

234 than necessary to let our combination go on
raising its prices to whatever it can got, for
you can readily understand that when wo con¬
trol the entire country we are not going to
stop and lot you he our only competitor.”

I said :

“Mr. Borst, then I suppose it is in vain for
me to expect that you are going to be inter¬
ested to have my license reinstated.”

(Affidavit of William Fox.)

He said:

lact, some of the manufacturers are criticis-
mg us lor not taking it sooner. The onlv
thing that I now can do for you-you say
‘“V’? “T to™. Mhs to got Mr. Kennedy
on the telephone tins past week and have boon
unsuccessful— 1 will try to get Mr. Kennedy
on the telephone some lime to-night and will
try to intercede 111 your behalf— that he pays
you the sum of money according to our
schedule that we have paid to all the other
him exchanges that we bought.”

I said :

“When shall I call hack to see you?”
Ho said :

“(.'01110 in tomorrow at 3 o’clock.”

I called on Mr. Bersl on Wednesday, November
29th. Ho said:

“I am awfully sorry to report to you that
I have boon unable up to now to locate Mr.
Kennedy. I cannot imagine why he does not,
come to the telephone when I leave my name.
Ho must have a reason for not wanting to
answer. Since you wore in to see me last
night I could not close mv eves when I lay in
bed. I saw your vision 'standing before 1110
all of the time, and I feel that a great injus¬
tice has been done to you in not giving you
the same sum of money that has been given
to the other film exchanges that wo bought.
Of course I am in hopes that I will bo able to
arrange it for yon — to get vou the money that
I fool you ought to get. If you will go out-

23g ( Affidavit of William Fox.)

side and sit down for a few minutes I will
ring up the three places where I am apt to
iind Mr. Kennedy and see whether I can talk
•with him.”

I then sat outside. Later Mr. Worst opened his
door and called me back into his private office and
informed mo that he was unable to got Mr. Ken¬
nedy on the telephone, gave mo his card with his
home address on and said that I should telephone
him later in the evening, and ho would make every
effort in the meantime to got in touch with Mr.

239 Kennedy. Later in the evening I did ’phono to
Mr. Berst and lie informed mo that ho had talked
with Mr. Kennedy and that I should ring up Mr.
Kennedy. I did got Mr. Kennedy on the tele¬
phone that evening and he asked me to call and
see him on Friday afternoon, December 1st. I
called on Mr. Kennedy on Friday afternoon, De¬
cember 1st. He said:

“Well, Fox, what can I do for you now?”

240 ‘‘Mr. Kennedy, I have been anxiously wait¬

ing to hear from vou on mv proposition of
$125,000.”

He said :

“Of course you know that it is out of the
question now.”

“I don’t see why that is out of the question.
I talked to Mr. Berst day. before yesterday,
and he seems to think that a grave injustice

(Affidavit of I Villkm Fox.) 24I

ommend* n°‘i° ‘7,"°’ 'f,ul would roc-

for my plant-* UteBli ^ bo "»

Ho said :

JZ?Vl0n’i bclio? tlmt *>How ^

ehedu e, and if yo 11 t a moment I
7 II pet my schedules out ami Seo wlmt your'
plant hgures to.” • 242

Ho then took from his safe and pocket certain
schedules, and lie explained to me that his idea
was that in case they fell into the hands of any¬
one else no one else could figure out the basis on
which they made out the prices for tlvoir plants,
without having them both, and for that reason
ho kept half in his pocket and half in the safe.

After going through a lot of litres ho told mo
that the price the schedule showed was $78,000.

1 reminded him of the fact that lie told mo at his
office that I10 was willing to pay $8.0,000, and that
Mr. AVators said he thought ho could get mo an • 243
even $100,000.

He said :

AVators was not authorized to make any
such statement. I have a faint recollection
that I said something like $88,000 or $89,000,
hut to show you that I will help the thing
along, why I will recommend that wo pay
you $90,000.”

244 {Affidavit of William Fox.)

I said:

“Mr. Kennedy, you claim you are my
friend and Mr. Borst says lie is my friend,
and your Executive Committee is made up of
three people, and 1 suppose a majority vote
rules. Now, if you are in favor of giving me
$100,000, I am sure Borst is. Your third
member of the committee, who is Mr. Albert
Smith of the Vitagraph Company of America
—I feel that ho would ho inclined to pay mo a
liberal price.”

245 Ho said :

“Well, I will ring up Borst and see what
he has got to say to $100,000.”

He then asked his operator to got Mr. Borst on
the wire, and held the following conversation with
Mr. Borst:

“I have Fox in my office and he wants
$100,000 for his plant.”

He then hung up his telephone and said :

246'

“I am awfully sorry that I did not connect
you on the wire so that you could hear what
Borst said; but Borst reminded me that the
schedule figures only $78,000 and said that in
his conversation with you the other day lie
said that he was only in favor of paying you
the exact amount the schedule calls for. Of
course there is no use ringing up Smith on
this matter, because I know Smith is your
friend and Smith would bo willing to give you
$150,000 if it was left to him. In view of
Borst ’s stand in the matter, the best I would
recommend to the Committee would be $90,-

( Affidavit of William Fox.)

000, and would depend upon Smith’s support
to get you the $90,000.”

I said :

“I am awfully sorry, Mr. Keunedv. T

ooo” lkR 0 mv<! ■vo" ilt luas,; ^0l)r

Ho said :

“box, for a lellow that has got nothing to
sell, you have got more nerve than any other 248
man .1. over ran into. Have you got in mind
that tomorrow night the last film will b?
shipped to you and that you will he down and
out of the business, and that In view of this
fact we are still friendly enough with you to
give you this money?”

I said :

“Mr. Kennedy, of course that is all very
nice of you, and I appreciate it very much,
but if you say that is the host you will do,

I suppose there will ho no need of my arguing
further on the subject. Of course you have 2 .
in mind that tomorrow night, as you said,
there will bo no more films shipped to mo.

I supply so many theatres who depend upon
brand new film, what; do you recommend so
that I can got film next week?”

He said :

“Wait a minute. T forgot all about that.
In the first place, young man, I can’t, treat
with you at all until you get a license. I can’t
buy your exchange if you haven’t got a
license.”

(Affidavit of William Fox.)

u going to arrange tlmt?”

“ I will ring up Marvin, Vice-President of
the Patents Company and sue it' I can’t show
him a way to recall the cancellation of your
license. ’ ’

your business can go on the same as ever
until we take possession — the contract will
provide tlmt wo take possession as of Decem¬
ber Hth at 8 A. M.”

Ho then bad his operator got Mr. Marvin on
the telephone and said :

“lam negotiating for the purchase for the
General Film Company of the plant of the
Greater Now York Film Rental Company. I
would like to have you recall the cancellation
of their license that yon sent the Greater
New York Company on November 14th. Now,
I don’t want you to do in this case as von
have done in the People’s Film Company
case. _ There, instead of recalling the can¬
cellation you simply extended the license for
another week and when our negotiations were
not closed in that week you had to give au¬

nt you to send a notice recalling
cancellation of the Greater New York
mse, so that they have it in their possos-
n tomorrow, so that I can send them their
'tracts for the purchase of their plant on

(Affidavit of William Fox.)

^m,in, to send the letter re-
on! mg the license, you will need the votes

o! the various manufacturers. You have mv
\oto tor the General Film Company Yoii
have your vote for the Patents Company "
Mr ,ul(;i;ll0,lu openitortlmi

" ,lh t'Hofe, and you have his vote
oi the Itdison Company. Now ring up a few
o* the other manuincturors until you get the
i!8 and tolt them

in l 1 said it was all right lo recall this can¬
cellation, as we have practically closed for
the jmrclmse ot that plant.”

I have now stilted, substantially, the most im¬
portant part of the conversation which lnstod
about two hours. In the course of it Mr. Kennedy
repeatedly said that iny company was in the way
of the General Film Company and that it was a
groat trust which could not allow itself to bo ob¬
structed by mo; and a great deal more to similar
effect, which I lmve not taken time to set forth
in detail. I then left, and on the morning of
December 2nd tile plaintiff received the notice
dated December 1st, recalling the cancellation of
license, which is set forth in tho complaint.

Mr. Kennedy afterwards sent me a bill of sale
to be executed by the plaintiff to the General
Film Company and a contract between that com¬
pany and my company, providing for the trans¬
fer of tho business, including good will and lease
of the premises occupied by my company. Ho
had said on December 1st that he would send me
those papers to be examined by my counsel.

On December 7th Gustavus A. Rogers, the
plaintiff’s counsel, in my presence and hearing
telephoned Mr. Kennedy to the effect that my
company would not sell, and on the next day (De-

(Affidavit of William Fox.)

comber 8th) we received the notice of cancella¬
tion to become effective on December 25th, which
is sot forth in the complaint.

On November 21, 1911, my company received
from Patho Frcrcs a letter of which the follow¬
ing is a copy:

‘ 1 Pati ee Fni5n.Es Motion Piotuiiks
41 West 25th Street

New York, Nov. 20th, 1911.

G . N. Y. Film Co.,

New York City.

Gentlemen:

We have been advised by the Motion Pic¬
ture Patents Company that your License
Agreement with the said concern will ter¬
minate on Monday, Dec. 4th.

We have therefore been instructed to dis¬
continue delivery of films to you on or after
the above date.

Wo regret very much that, wo have to dis¬
continue business relations with you in this

Wishing you the best success and thanking
you for past favors, we bog to remain,
Yours very truly,

Paths Fheiies,

Per M. Ramirez Tones.”

For the reasons set forth in the complaint it
will bo impossible for the plaintiff to carry on
its business if its license should be cancelled or
the supply of films cut off by the licensed manu¬
facturers or the regularity and promptness of
the service in any wise interfered with.

The principal customers of the plaintiff are
ten of the largest, best equipped and best pat¬
ronized theatres in the Boroughs r.f Manhattan

(Affidavit of William Fox.)

and Brooklyn, City of New York, devoted to the
exhibition of motion pictures. I am familiar with
the management and conduct of these theatres
and interested in them, and have had frequent
opportunity of observing the character of the pic¬
tures displayed thereat. Since the formation of
the Motion Picture Patents Company and the ex¬
ecution ot the exchange license agreement, Ex¬
hibit A, .every and all of the theatres aforesaid

manufacturers exclusively. Some of the theatres
have come into existence since that time, but im- 260
mediately upon the opening of the theatre and to
the date hereof no other pictures have boon shown
therein excepting those of the licensed manufact¬
urers; and the effect of disconli lining the use of
the licensed film in any of the houses and par¬
ticularly in the now theatres would bo not only to
destroy thy. effect of months of advertising in the
new theatres and several years of advertising in
the older theatres, but the result would be ruinous
to the theatres. r~am the nmnaging olIimr_»£ \ ^

every and all of the theatres and entirely familiar V"""
witlf the perftjrmandcsj'Miil upon my own knowl-
odge-oftliF'nioatroi'Ti'nd the conditions thereat,

I state that if the licensed manufacturers refuse
to or cannot bo compelled to or will not bo com¬
pelled to deliver the licensed film to the plaintiff
so that the theatres aforesaid may lease the li¬
censed film, that it will he absolutely necessary
for all of these theatres to cease their business
relations with the plaintiff and to get the licensed
film from the defendant jJenqral Film Company;
so that the situation will he that-thejfiaintiff will
lose the best and most profitable patrons that it

( Affidavit of William Fox.)

its customers to the General Film Company and
it would be impossible to get them back.

The film produced by the independent manu¬
facturers referred to in the complaint, is for the
reasons there staled not capable at this time of
substitution for the licensed ‘ilm. It lias not the
same runge of subjects and is not produced in
us large quantities as the licensed film, and it is
impossible for any ugonoy or exhibitor using li¬
censed film to use in connection therewith any
unlicensed film. That would be a violation of the
license agreement, and the use of such independ¬
ent film would also make the plaintiff and its eus- '
toiners liable to suit by the Patents Company for
infringement of. patents. The Patents Company
lias brought a number of such suits against ex¬
hibitors. There have been instances where li¬
censed limnutucturors having discovered unli¬
censed film in a motion picture theatre, have
promptly replevied the licensed film and there¬
upon the Patents Company lias cancelled the li¬
cense of the exhibitor.

The value of the plaintiff’s business and good
will, so long as its license continues in existence,
is from $600,000 to $750,000, and the plaintiff
from October 1, 1010 to October 1, 1911 earned in
its business between $60,000 and $75,000. If
ito license should bo cancelled, its business and
good will would be destroyed and become worth¬
less and it could not sell its plant for more than
the value of the fixtures.

Referring ;.to the accompanying affidavit of
William H. Swanson, I was present at the meet¬
ing of representatives of the rental exchanges in
January, 1909 when the license agreement, like
Exhibit A, was brought to our attention, and we

268 (Affidavit of William Fox.)

were informed that we must accept it and do busi¬
ness according to its conditions. As stated in Mr.
Swanson’s affidavit, a committee of representa¬
tives of the rental agencies was appointed to con¬
fer with the representatives of the Patents Com¬
pany and the licensed manufacturers, and that
/ committee, of which Mr. Swanson was chairman,
reported back to us that no change in the agree¬
ment could be obtained, but that the Patents Com¬
pany and the licensed manufacturers informed
our committee that the license was good for the
unoxpired term of the patent under which we were
to he licensed, that is reissue letters patent 12192,
and that no license could be cancelled except for
violation of its conditions and after a full hearing.

On or about January 20, 1909, which is the date
of the plaintiff’s license, I had a conversation with
Dwight Macdonald who was General Manager of
the Patents Company, upon this subject. I tele¬
phoned him and said that I had the contract on
my desk but had not signed it and wanted to bo
sure of where my company would stand and how
long the contract was good for. lie said, in sub-
2 yQ stance, that I had overheard the discussion at the
meeting and heard Swanson ’s report that the li¬
cense was good for the unoxpired term of the
patent, and that I might be perfectly sure I would
not lose the license so long as the patent was in
force unless I violated the terms of the license.

William Fox.

Sworn to before me this )

16th day of December, 1911. \

Raphael Bmll,

Notary Public No. 109,

New York County,

SUPREME COURT,

New Yobic County.

Gbeateii New York Fiwi Ren.
tal Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,
Defendants.

State and County ok New York, ss:

Corns Roskndluii, being duly sworn, says:

I mn, and have boon since its organization,
Manager of the plaintiff in this action.

I am familiar with the moving picture business
in its various branches, and particularly with the
business formerly conducted by rental agencies
like the plaintiff.

Before December, 1908, there were' 123 rental
agencies carrying on business throughout the
United States. After the organization of the
Patents Company and the combination effected
with the licensed manufacturers, the number was
reduced to 72 rental agencies, which wore licens¬
ed by the Patents Company under license agree¬
ments in all respects similar to the one issued to
the plaintiff, Exhibit A attached to the complaint.

Nino of the 72 licensed agencies were located in
the Borough of Manhattan, City of New York.
The only one of the 72 licensed agencies now re-

74 (Affidavit of Louis Rosenblttli.)

maining in business is the plaintiff in this action,
I know the fact from my acquaintance with the
trade, and, besides that, the information was
given mo by P. L. Waters, manager of the Gen¬
eral Film Company, in a conversation had with
him at his office about the middle of November,
1911.

That conversation was a sequel to a conversa¬
tion I had with Mr. Waters at his office about
throe months earlier, when I called upon him in
response to a telephone invitation from him.

75 Mr. Waters talked with me in a general way
about the sale of the business of the plaintiff to
the General Film Company. Ho said he thought
it would bo advisable for the plaintiff to sell, and
that he did not see how it would be possible for
it to continue in business in competition with the
General Film Company. He said that the
Greater New York Film Rental Company was
the only licensed rental agency in the United
States, except the General Film Company and
one concern in the West. Ho instanced his own
experience as owner of the P. L. Waters Ex-

-6 change in this City with the General Filin Com¬
pany. 1-Ie sold that business about July, 1910, to
the General Film Company, and said to me that
if ho could be assured of a license from the Pat¬
ents Company and that it would not be cancelled,
he would gladly repay all the money ho had re¬
ceived for the sale of his business and pay $100,-
000 additional for the privilege of carrying on a
rental exchange in this City.

At the second conversation with Mr. Waters,
which was upon the same general subject, he told
mo that the western concern was no longer a li¬
censed exchange, thus leaving the General Film

(Affidavit of Louis Rosanbluh.)

Company in solo possession of the field in the
United States, with the exception of the plaintiff
in this action.

On or about November 29, 1911, 1 had a con¬
versation with Mr. J, A. Hurst, a director of the
doloudant Patlie Freres and treasurer of the de¬
fendant General Film Company. I wont to Mr.
Burst’s office for the purpose of arranging a
meeting between him and Mr. William Fox, Pres¬
ident of the plaintiff, which I did arrange for that
afternoon.

I asked Mr. Borst why the plaintiff’s license
had been cancelled, and be said that the Greater
Now York Film Rental Company was the only
licensed rcntnl agency remaining in business, ex¬
cept the General Film Company, and it was neces¬
sary to got our concern out of the way. Ho said
that the managers of the various branch offices
of the General Film Company reported to him,
through officers of the Company, when asked why
they could not got prices for film from exhibitors,
that it was impossible so long as the Greater Now
York Film Rental Company was in the field, be¬
cause, whenever the General Film Company ex¬
pressed an intention to increase the rentals to
exhibitors, the latter replied that they would get
their film from the Greater Now York Film
Rental Company, which had not increased its
prices, and that some of the customers of the
General Film Company had already gone over to
our concern.

The plaintiff never solicited the patronage of
any customers of the General Film Company, but
has lost customers to the General Filin Company,
which has been actively soliciting the trade, and
has been cutting prices and renting films below
the prices charged by the plaintiff.

2 So (Affidavit of Louis Rosenbluh.) ,

As much ns throe or four weeks before Novem¬
ber 14, 1911, the date of the first notieo of can-
cellnlion of the plaintiff’s license, rumors wore
widespread through the trade in Now fork that
the plaintiff would soon lose its license and ho
compelled to retire from business. Frequent re¬
ports came to mo from exhibitors, who were
doing business with the plaintiff, that such state¬
ments had been made by a representative of the
General Film Company, and many of our custom¬
ers inquired whether the statement was true.

281 Ever since the organization of the plaintiff, it
has had standing orders with every one of the
licensed manufacturers (so designated in the
complaint) for the entire output of films of each
of such manufacturers, except that occasionally
such an order would he cancelled when the pro¬
duct of a particular manufacturer for a time fell
below the standard and proved unsatisfactory to
exhibitors.

Since the combination made in the latter part
of 1908 or the beginning of 1909, the plaintiff has
continued to keep standing orders with each of
said licensed manufacturers for the entire output
2®2 of such manufacturers, and has paid the rental
fixed by the plaintiff’s license agreement, which
is eleven cents per running foot, subject to a
rebate of 10 per cent, as provided in said license.

During the period of competition among the
manufacturers preceding the aforesaid combina¬
tion, greater enterprise was displayed by the
manufacturers in obtaining and depicting new
scones and subjects than they have shown since
the combination; the plaintiff and other rental
agencies existing during the period of competi¬
tion bought the films outright, paying therefor

( Affidavit of Louis Rosenbluh.) 283

less than since the combination has been exacting
for the films in the way of rental; the plaintiff
ami other rental agencies, before the combination,
wore able to make more extensive and profitable
use of the films, first, because being the owners
thereof they could run them indefinitely in mov¬
ing picture shows so long as exhibitors could bo
found who were willing to use the films, and in¬
asmuch as new exhibitors and new show places
wore constantly springing into existence in places
where moving pictures wore a novelty, the films
could bo kept in service for as long a period as 284
two years, and in fact until they were physically
worn out and useless; and, secondly, the rental
agencies wore not confined to leasing films to ex¬
hibitors licensed by anybody, and thus wore free
and unhampered in carrying 011 their business.

Since the combination, as appears from the li¬
cense agreement, Exhibit A, the period during
which a rental agency can use the films is limited,
and they may bo leased only to licensed exhibitors.

In addition, there is, and always has boon, since
the combination, constant danger of cancellation
of a license owing to dishonesty of a licensed ex¬
hibitor who may yield to the temptation to pass 2
films on to some unlicensed exhibitor, and there
has frequently boon more than a suspicion in the
trade that such occurrences have been instigated
by the Patents Company to afford an excuse for
cancelling licenses. Owing to such risk in putting
films into the hands of licensed exhibitors, it has
been necessary for the plaintiff to restrict its ac¬
tivities, and it has in fact reduced its business out¬
side of the City of New York so that it eoukl keep
close watch of the exhibitors to whom it leased
films. It has also been necessary for the plain-

96 •• '

2gg (Affidavit of Louis liosunbhih .)

(iff to go to the expense of employing inspectors
to visit the shows given by licensed exhibitors
dealing with the plaintiff, to make sure that there
was no violation of the terms upon which the
films were leased or of the conditions of tiio plnin-
tiif’s licenso.

Before .January, 1909, the prices of Him sold
by the various manufacturers varied, some being
sold as low as 7>/o cents per running foot. After
the combination, the prices charged by all the li¬
censed manufacturers wore the same, and higher
2S7 than the average prices before prevailing.

The plaintiff has been obliged to reduce, und
has reduced, the territorial extent of its business
for the reasons mentioned.

The plaintiff has a largo investment in its
plant und business, and has built up a valuuble
good-will, which is day by day increasing in
value, and it has made and is making large profits
from its business. If its license wore cancelled,
and its supply of films cut off, or the promptness
and regularity of the supply in any wise impaired,
the plaintiff’s business would be ruined.

Its business requires it to rocoivo from each of
288 the licensed manufacturers the entire output of
such manufacture as fast as the fdms are ready
for the market. The essence of' the rental ex¬
change business lies in the ability of the rental
agency to furnish new films, i. e., films containing
new scenes and subjects — to exhibitors weekly, in¬
sufficient quantity to give them a variety of choice,
and for that reason the plaintiff has always main¬
tained standing orders for the entire output of
all said manufacturers, and has thus far been
served promptly and regularly and without dis¬
crimination.

(Affidavit of Louis Rosenbluh.)

The films are designated as “runs,” according
to the dates on which they are leased to exhibit¬
ors. The plaintiff usually bought from the li¬
censed manufacturers 86 reels of film per week,
and has latterly bought from them 38 reels per
week. Each retd contains a new scone or subject,
and a release date is designated for each reel on
which dale it may bo leased to exhibitors. Film
supplied on the release date is known as the “first
run”; that supplied on the next day is known us
the “second run,” and so on. The plaintiff has
customers who take “first run” together with
subsequent ‘runs,” and other customers that
always take later than “first runs.” Those that
make a practice of showing “first run” film would
not deal with the plaintiff unless they wore
promptly supplied with the “first run,’’ and if
such film should, by means of any delay, be sup¬
plied by the plaintiff after the release date, it
would not bo serviceable as “first run” film, be¬
cause other exhibitors obtaining their supply
through the General Film Company would already
have shown the same subjects on an earlier date.
In all large cities, and particularly in New York,
the freshness of the supply of film is of prime im¬
portance, and it would be impossible for the plain¬
tiff to supply its best customers if it were not
regularly and promptly furnished with all the
new scenes and subjects put out by the licensed
manufacturers.

Lours Rosr.xm.un.
Sworn to before me this)

16th day of December, 191J.J
David Davis,

Notary Public,

Kings County, No. 83.

Certificate filed in N. Y. County.

Registers No. Kings Co. 4346. N. Y. County
2181.

t. __ . t i

SUPREME COURT OP THE STATE OF NEW

YORK.

Cheater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and OtllOl'S,

Defendants.

State and County op New York — ss:

William II. Swanson, being duly sworn, says:

1. I reside in C'hicugo, Cook County, Illinois.
In the year 1906 I formed the firm of William H.
Swanson & Company at No. 79 Clark Street,
Chicago, Illinois, I engaged in the business of pur¬
chasing motion picture film and projecting nm-
chinos and leased the films and machines to ex¬
hibitors on a weekly rental basis. In 1907 I form¬
ed and organized a corporation under the laws
of the State of Illinois, known as the William II.
Swanson Dixie Film Company, and established
a similar business at New Orleans, La. In the
same year I organized and incorporated a cor¬
poration known as the William II. Swanson St.
Louis Film Company, doing a similar business at
St. Louis, Mo. The following year I personally
established the William II. Swanson Kansas City
Film Company, doing a similar business in

{Affidavit of William II. Swanson.)

Kansas City, Mo. The same year I per¬
sonally established the William II. Swanson
Omaha Film Company at Omaha, Nebraska, doing
a similar business. I continued to conduct all of
the foregoing establishments until the latter part
of 1908. During all of this time I purchased mo¬
tion picture films from all of the following con¬
cerns: American Mutoscope & Biograph Com¬
pany, Edison Manufacturing Company, Essanay
Company, Kalem Company, George Kloine, Lubin
Manufacturing Company, Pathe Froros, Selig
Polyscope Company, and Vitagruph Company of
America, and from several of them I purchased
projecting machines. The film that I purchased
was mine, and I paid for same, and, as I have
heretofore described, in turn I leased the film to -
exhibitors. Up to the year 1908 I lmd established
a largo business, the not profits of which wCre at
least $lQ0^000_a year. The markot-was open. I
was pernutteiTtd'bujnilm wherever I chose to buy
it. The manufacturers were competing with each
other and selling goods only on quality, without
regard to standing order. By that I mean that I
was not obliged to give any specified order — any
continuous number of regular releases which could
not be discontinued by means of a two weeks
notice given in advance of the next coming release

'///

V4y‘"

(a) I will hereafter show that after the forma¬
tion of the combination of the manufacturers and
the organization of the Motion Picture Patents
Company the course of dealings changed entirely :
instead of it being a purchase arrangement, I and
the other agencies wore only permitted to lease
film and not to purchase and could not purchase

101

100

2g8 (Affidavit of William II. Swanson.)

but wore obliged to take what the manufacturers
saw fit to give us, and that the quality of film was
to bo determined absolutely by the manufacturers.

II. — Prior to January, 1009 the licensed man¬
ufacturers, to wit : American Mutoscope nnd Bio¬
graph Company, Edison Manufacturing Com¬
pany , Essanny Company, Kaloin Company,
George Kleine, Lubin Manufacturing Company,
Patlio Frores, Solig Polyscope Company, and
Vitagraph Company of America, had combined,

299 and the Motion Picture Patents Company was
formed in the latter part of 1008 or in the early
part of 1009.

(n) Thereupon, at the request of the licensed
manufacturers a meeting of the representatives
of all of the film rental exchanges in the United
States was called while in session at the Imperial
Hotel, Borough of Manhattan, City of New York,
on or about January 12, 1000. At this meeting
there were representatives of about, one hundred
film rental exchanges. I attended this meeting
as a representative of the following concerns in

-*00 which I was interested either ns the sole owner
or as the majority stockholder; William II. Swan¬
son & Company, of Chicago, Illinois; William II.
Swanson Dixie Film Company; William II. Swan¬
son St. Louis Film Company; William II. Swan¬
son Kansas City Film Company; and William II.
Swanson Omaha' Film Company.

III. — At that meeting the representatives of
the film exchanges wore informed by the manu¬
facturers that the latter had formed the Motion
Picture Patents Company and that it had li-

(Affidavil of William II. Swanson.) 30I

consod the manufacture of films and that there¬
after the licensed manufacturers would only deal
with such of the film exchanges as should bo li¬
censed by the Motion Picture Patents Company;

(a) That no films would be sold but that films
would only be leased to the licensed exchanges
under the terms of an agreement which they had
prepared for signatures of such exchanges as they
hud determined to license. They also stated that
they had concluded not to license all of the ex¬
isting ugoncios, but that some of the agencies 302
would not ho licensed. The fact is that a number
of the exchanges were refused a license.

(h) It was also stated that the licensed rental
agencies would only be supplied with leased films
as long as they continued to hold the license of
the Motion Picture Patents Company, and no
longor, and that the licensed rental exchanges
would only sublease the film to such exhibitors
as would bo licensed by the Motion Picture Pat¬
ents Company and none others, nnd that for each
projecting machine upon which the film was
shown a license fee of two dollars per week must 3°3
he paid to the Motion Picture Patents Company.

(0) It was also stated that no licensed film
rental agency should purchase, lease or deal in
any other film excepting the film leased from the
licensed manufacturers, and that no licensed ex¬
hibitor would be permitted to show or exhibit any
film excepting the leased films of the licensed
manufacturers, and that the agencies must return ■
within a specified time the film which they had
purchased and take in exchange leased film for

102 '

io:s

304 (Affidavit of William II. Swanson.)

which they wore to pay the leased price. Before
the close of the mooting there was road to tire
representatives of tire iilm rental exchanges a
printed form of exchange license agreement sim¬
ilar in form to the exchange license agreement
between the Motion Picture Patents Company and
the Greater Now York Film Bontal Company, an¬
nexed to the complaint in this action, marked
Exhibit A.

IV.— After the announcement was made, and

305 the reading of the agreement referred to in the
preceding paragraph, the representatives of the
manufacturers stated that that was the only form
of agreement that would bo accepted by the Mo¬
tion Picture Patents Company, without modifi¬
cation, and that any film rental exchange that
refused to sign the agreement would not be sup¬
plied with film. Printed copies of the agreement
wore circulated among the representatives at the
meeting, and they were informed that the Com¬
mittee of the manufacturers was waiting in an
adjoining room to get the sense of the mooting.
All of the representatives of the film rental ox-

306 changes protested against signing the agreement
and to the request for a compliance on their part
with the conditions contained in it.

(a) As the result of the unanimous protest of
the representatives of the film rental exchanges
a committee was appointed of which I was the
chairman. This committee waited on the commit¬
tee of the Motion Picture Patents Company and
the licensed manufacturers consisting of Frank h.
Dyer of the Edison Company, H. N. Marvin of the
American Mutoscope & Biograph Company and

(Affidavit of William II. Swanson.) 307

Mr. George T. Scull, at No. 10 Fifth Avenue, Bor¬
ough of Manhattan, Now York City, which was at
the time the headquarters of the Motion Picture
Patents Company and which at that time was the
headquaiteis of the Edison Manufacturing Com¬
pany the aforesaid three having been repre¬
sented as being the Executive Committee of the
Motion Picture Patents Company. I stated, as
the chairman of our committee, that the meeting
of the representatives of the film rental exchanges
had takun an adjournment and had postponed'
action, because there was a unanimity against 3°8
signing the agreement, and that on behalf of the
representatives oi the film rental exchanges our
oommitteo was directed to say to the Motion Pic¬
ture Patents Company and licensed manufac¬
turers, that the agreement was harsh and arbi¬
trary and should not be exacted. Mr. Dvor said
that if the rental exchanges did not want to sign
the agreement they did not have to. I thereupon
asked Mr. Dyer whether if we did not sign it the
licensed manufacturers would supply us with
film. Ho said they certainly would liot, that he
had already stated to us, and repeated, that no 309
one could buy any film at all, and that the li¬
censed manufacturers would not lease the film ex¬
cepting to such exchanges as were licensed and
had signed the agreement. I then stated that if
wo did not sign the agreement and get a license
and they would not lease films to us, that the ex¬
changes would have to go out of business. Mr.^*^^"
Dyer said that was up to us. I then usked him
how long wo wore to bo bound by this agreement —
how long this agreement was to bo for; that they
did not mention any specific time in the agree-

3io

(Affidavit of William II. Swanson.)

raent, nnd still tliey said in it that they could can¬
cel it at any time with or without cause. Mr. Dyer
said that the license agreement was for the life
of the patent and that unless it was cancelled in
the manner provided in the agreement it would
continue through the life of the patent. I then
asked him how the agreement was going to con¬
tinue through the life of the patent when they did
not say in the agreement that it might bo cancelled
only “for cause,” and requested him to insert a
provision in the agreement that it could he can-
3 1 1 celled only for cause. He said that we could rest
assured that no man’s license would he taken from
him unless it was for cause and that if he lived up
to the terms of the agreement it would continue
throughout the life of the patent, nnd that if there
were any violations of the agreement assorted
that the man would have a fair and full opportun¬
ity of making explanations before his license was
taken away. I thereupon became insistent that
there were other things in the agreement that re¬
quired change, and Mr. Dyer became impatient
and said that the agreement had been prepared
in that form for signature by everybody and not
3 a word in it would he changed and it must be
taken in that way or not at all.

V. — The committee made a report to the meet¬
ing of the representatives of the film exchanges,
and discussion was had as to a way or moans of
obtaining film other than through the licensed
manufacturers, and it was the unanimous sense
of the meeting, after a full discussion, that there
was no way in existence or that could he devised,
of getting American film, excepting through the

105

(Affidavit of William II. Swanson.) 3I3

licensed manufacturers, and that the only foreign
film that was commercially of use was that of the
Patho Frorcs Company which had also joined the
licensed manufacturers.

(a) "With respect to the fact of obtaining film
I state that at the time of the formation of the
combination there were absolutely no manufac¬
turers in the United States or Canada manufac¬
turing film, and that there was no source of sup¬
ply in America except through the licensed manu¬
facturers; that all the foreign film manufacturers 3*4 ■
whoso product was obtainable and had com¬
mercial value for us, were controlled by Pathe
Frorcs a manufacturer which lmd joined the
ranks of the licensed manufacturers and was one

of them, and a few concurns the output of which
was controlled by George Klcinc, referred to in
the license agreement as a licensed manufacturer,
nnd who had joined the ranks of the licensed
manufacturers, and ulso the supply of George
Molios who had joined the ranks of the licensed
manufacturers.

(b) The fact is that the demand since 1909 has 3 5
been for the film of American manufacture to

the practical exclusion of the foreign made film,
and that the ratio is about seven American films
to one foreign film.

VI. — The representatives of the film exchanges,
confronted with this situation and considering
Hint the}' wore forced to sign the agreement or
abandon their business, with the exception of the
representatives of two concerns, expressed a will-

106

Jl6 ( Affidavit of William II. Swanson.)

ingnoss to accept the agreement, and I am in¬
formed, that with the exception of those two con¬
cerns, that all of the agencies tlmt the Motion
Picture Patents Company was willing to license,
thereafter executed the agreement— the total
number of which I am informed and believe, is
approximately seventy-five — and as to those two
concerns, to wit: Chicago Film Exchange, of
Chicago, Ill., and the Globe Film Exchange, of
Chicago, Ill., both of which had a number of
branches throughout the United States, they were

3 1 7 practically driven out of business and wore com¬
pelled to abandon their branches and the busi¬
ness of the main offices dwindled to almost noth¬
ing.

VII— It was stated by Mr. Dwight Macdonald,
that lie was acting as the general manager for the
Motion Picture Patents Company, and that state¬
ment was likewise made by the representatives
of the Motion Picture Patents Company and the
licensed manufacturers, and the representatives
of the various exchanges were directed tlint all
future dealings beginning with the signing of the

3 1 8 agreements and thereafter, should be had with
Mr Macdonald. The fact is that Mr. Macdonald
was the general manager of the Motion Picture
Patents Company, and I have seen a number of
agreements that have been executor by Mr. Mac¬
donald as the general manager of the Motion
Picture Patents Cmpany. After I had express¬
ed a willingness to accept and execute exchange
license agreements for the various places in
which I or my companies were interested, ns
hereinbefore described in paragraph I, of this
affidavit, there was delivered to me a form of

107

( Affidavit of William II. Swanson.)

license exchange agreement for each place ex¬
cepting the one at Now Orleans, La. I executed
the agreements and sent them to the Motion Pic¬
ture Patents Company by mail to No. 10 Fifth
Avenue, Borough of Manhattan, Now York City,
but they were never returned- to me and I never
received executed agreements, Several com¬
munications I sent to the Motion Picture Patents
Company received scant attention.

(a) I was supplied with leased film, however,

for loss than two months, and in February, 1900, 320

I was notified that I would not got any more film,
and all of the exhibitors to whom I rented receiv¬
ed a notice from the Motion Picture Patents
Company that I was not licensed to rent films and
that they wore prohibited from taking service
from 1110 und that they must take service from
one of the licensed rental exchanges.

(b) I have not been supplied with any films
from February, 1909, to the date hereof, by any
of the licensed manufacturers, and I was unable
to get any film elsewhere.

321

(e) After receiving the notice from the Motion
Picture Patents Company, and having been noti¬
fied by the exhibitors to whom I had rented film,
that they were instructed by the Motion Picture
Patents Company to discontinue renting from 1110
I went to Mr. George Kloino, Mr. William Selig
of the Selig Polyscope Company, Mr. George
Spoor of the Essanay Company, Mr. John Har¬
den, a representative of the Edison Manufacturing
Company at Chicago, Mr. John Bock, the Chicago
representative of the Vitngraph Company of

108

322 ( Affidavit of William II. Swanson.)

America (who is the son of Mr. William Rock,
the President of that Company), Mr. William
Wright, the Chicago representative of the Kalem
Company, and Mr. Montague, the Chicngo repre¬
sentative of the Pathe Freres Company, all of
whom wore the men that I had previously dealt
with in the course of my business with the various
companies which they represented, and I request¬
ed that the orders that I had for film be filled,
stating that it was destructive to my business if
they did not fill the orders. I was informed by

323 each and all of them that they had instructions
from the Motion Picture Patents Company not
to ship me any film, that under the arrangement
they were not permitted to ship any film to me
and that they would not ship any.

(d) I tried to do business with the films that I
had on hand, hut I was unable to do so on ac¬
count of the wide publicity which was given by
the Motion Picture Patents Company to the fact
that I had no license to rent film, and further, it
was a matter of common knowledge that where
films were shown by exhibitors that did not come

324 from licensed agencies, that the licensed manu¬
facturers by writs of replevin and other court
proceedings during the course of the exhibitor’s
performance seized the films that were being
shown, carried them away and broke up the per¬
formance. Some of the exhibitors expressed
themselves to me to the effect that if they handled
my film they would he subject to these suits in
replevin and court proceedings and also damages
and they did not want to become involved and con¬
sequently went elsewhere to got their films. For
a period of several months my business was at a

10!)

( Affidavit of William II. Swanson.) 325

practical stand-still — so much so that the receipts
of the agencies immediately dropped from a not
profit of $3,000 a week to a not loss, finally re¬
sulting in my being compelled to discontinue all
of the agencies. I had a cash capital of $100,000
or more in addition to the stock of films I had on
hand and the assets and good will of my business
which were worth $750,000.

(0) So that while at the time when the Motion
Picture Patents Company was formed and the
combination was made with the licensed manu- 326
facturers 1 had a plant the assets and good will
of which were worth $750,000 over the liabilities,
before the close of the year 1909 my capital was
gone and my places since wiped out of existence.

For a period of about throe years prior to 1909
the net profits annually of my business averaged
about $75,000 a year. After the refusal to ship
there wore no profits, and, in fact, in my attempt
to carry 011 business I lost all I had and was wiped
out as I have heretofore explained.

VIII.— Before January, 1909, the prices at
which I purchased film wore less than the soiled-
ule fixed under the exchange license agreement.

J.'he highest price I over paid for film was twelve
cents a foot, to the Edison Company, and not
more than ten cents a foot to any of the other
manufacturers, and to most of the manufacturers
less than ten cents a foot— some of them seven
and one-half cents a foot, depending 011 the quant¬
ity purchased — and of the same quality, kind and
run as in the schedule of the exchange license
agreement was to be leased to the rental ex¬
changes at thirteen, eleven and nine cents a foot,

1 .... i

328 {Affidavit of William II. Stvanson.)

so that the prices at which the films were to he
leased from the licensed manufacturers wore
greatly in excess of the prices at which I had previ¬
ously purchased the, films. Directly after the for¬
mation of the Motion Picture Patents Company I
was notified by the various projecting machino
manufacturers that the minimum price for a pro¬
jecting machino would he raised from Ninety-five
dollars and One hundred dollars, which were the
then prevailing prices, to One hundred and fifty-
five dollars, and in some instances to Two hundred

329 and twenty-five dollars. This rise of price by the
projecting machine manufacturers, I am informed,
was accomplished by a combination between the
projecting machine manufacturers and the Motion
Picture Patents Company, under which the man¬
ufacturers paid a royalty of Five dollars on each
machine, and the concerns which wore manufac¬
turing the machines were licensed by the Motion
Picture Patents Company or driven out of busi¬
ness, as no exhibitor under a license exchange
agreement was permitted to exhibit films on any
but licensed machines, and every machine was re¬
quired to have attached a label to the effect that

330 it was duly licensed by the Motion Picture Pat¬
ents Company.

William II. Swanson.

Sworn to before me this 15th?
day of December, 1911. j
Louis Cohen,

Notary Public, No. 54,

N. Y. County.

Ill

SUPREME COURT,

against

Motion Pictuhe Patents Com¬
pany and others,

Defendants.

State and County op New Yoiik — ss:

James J. Lodge, being duly sworn, says :

I live in Chicago, Illinois, and am Vice-Presi¬
dent and General Mannger of George Melios
Manufacturing Company, a corporation organized
under the laws of the State of Illinois, and carry¬
ing on business in Chicago.

The defendant Melios Manufacturing Company
is a Now York corporation, formed about July,
1910, by Gaston Melios, who was and still is Presi¬
dent of the George Melios Manufacturing Com¬
pany. He offered his resignation as such Presi¬
dent, but our Company refused to accept it.

Said Gaston Melios and his son, Paul Melies,
who was an employe of our Company, left that
Company in the summer of 1910, induced, as I
have always believed, by the Motion Picture Pat¬
ents Company and others, and organized the
Melies Manufacturing Company.

334

(Affidavit of James J. Lodge.)

My company, tlic George Holies Manufactur¬
ing Company, was one of the original “licensed
manufacturers” under license granted by the
Motion Picture Patents Company in or about
December, 1908.

Such a license was signed by the Patents Com¬
pany and by myself in behalf of my company, and
nothing remained but to attach the seal of the
Patents Company. The license was left with
Prank L. Dyer, President of the Patents Com¬
pany, for the purpose of having the seal of his
335 company attached and on his promise to have the
seal attached and forwarded to me in Chicago.
The license never was forwarded to me, and I saw
such license, for the first time since its execution,
about 12 months ago, in the course of talcing testi¬
mony in a suit brought by my company against
the Motion Pitouro Patents Company to compel
the Motion Picture Patents Company to deliver
the license and specifically perform its undertak¬
ings therein. That suit is ponding in the United
States Circuit Court for the District of New
Jersey.

The licenses granted by the Patents Company
33^ to the so-called licensed manufacturers wore
identical in terms. One of the provisions of each
of those license agreements was that the licensed
manufacturer covenanted not to supply film to
any film rental agency which was not licensed by
the Motion Picture Patents Company. It was
agreed among all the licensed manufacturers and
the Patents Company, at the time when the license
agreements were made, that the licensed manu¬
facturers wore under obligation to and would fur¬
nish the film manufactured by them, respectively,
to all film rental agencies in the United States

(Affidavit of James J. Lodge.)

that wore licensed or should be licensed by the
Motion Pioturo Patents Company. This was a
frequent subject of discussion at mootings of the
licensed manufacturers with officers of the Motion
Picture Patents Company. One or more officers
of the Patents Company, usually Mr. Frank L.
Dyer, the President, or Mr. Marvin, the Vice-
President, or Mr. Kennedy, the Treasurer, were
almost always present at meetings of the manu¬
facturers.

The agreement and obligation of the licensed
manufacturers to furnish film to all licensed film
rental agencies was just as distinot and well un¬
derstood as their written obligation in their li¬
cense agreements not to furnish their film to any
rental agency that wTas not licensed by the Pat¬
ents Company.

Immediately after, as I understood, my com¬
pany had been licensed by the Patents Company,
it received from the Patents Company a list of
licensed rental agencies, with instructions to sup¬
ply film to no other agencies, and from time to
time thereafter received revised lists showing
changes in the licensed rental agencies, some of
the licensed agencies having been eliminated, and
our instructions were not to supply any film to
such agency whoso license had been cancelled.

For a considerable time before the formation of
the General Film Company, the project of organ¬
izing such a company for the purpose of control¬
ling the business of supplying films to licensed ex¬
hibitors was discussed at meetings of the licensed
manufacturers and the Patents Company, and it
was agreed that such a corporation should bo
formed for that purpose, and that the licensed
film rental agencies throughout the United States

338

1 _ l I

340 (Affidavit of James J. Lodge.)

should bo absorbed by the now corporation to bo
composed of or controlled by the licensed manu¬
facturers..

The General Film Company was accordingly
organized under the laws of tho.Stato of Maine
in the spring of 1910, and my information is that
it lias absorbed or eliminated every film rental
agency in the United States, except the Greater
New York Film Rental Company.

At meetings of the licensed manufacturers and
the Patents Company preceding the formation

341 of the General Film Company, it was stated that
every licensed manufacturer would have the
privilege of becoming a subscriber for stock of
the General Film Company, and my understand¬
ing is that every one of the licensed manufactur¬
ers, except perhaps the Melies Manufacturing
Company, did acquire stock in the General Film
Company, either in its own name or in the name
of some officer. The understanding was that the
licensed manufacturers were to share equally in
the stock of the General Film ' Company. The
officers and directors of the General Film Com¬
pany, since its organization, have been made up

34 2 of officers or directors or, representatives of the
licensed manufacturers, and the General Film
Company, ever since its organization, has been
and still is completely controlled by the licensed
manufacturers, and is simply the licensed man¬
ufacturers in a single corporate form. I do not
know whether the Patents Company actually
owns or controls any stock in the General Film
Company, but the relations between that Com¬
pany and the General Film Company, and, in¬
deed, among the Patents Company, the licensed
manufacturers and the General Film Company,

( Affidavit of James J. Lodge.) 343

is of the closest character, and they constitute a
single control and are practically a single organ¬
ization.

The talk bad over and over again at mootings
of the licensed manufacturers and the Motion
Picture Patents Company was to the effect that
the film rental agencies and the exhibitors were
making a disproportionate profit out of their bus¬
iness and realizing more proportionately than the
manufacturers, and flint that was a condition
which must bo remedied by getting control of the
supply of film into the bands of the manufactur- 344
ors and the Patents Company by moans of the or¬
ganization of such corporation as the General
Film Company, and that such corporation when
organized would bo in position to cliango the
rates for supplying film and exact a rental in
proportion to the profits made by the various ex¬
hibitors.

From the time when the combination between
the Patents Company and the licensed manufac¬
turers was first made in December, 1908, the in¬
tention 1ms been unswervingly to obtain the ex¬
clusive control of and, so far as possible, monopo¬
lize every branch of the motion picture business, 345
including the manufacture of the cameras with
which the pictures are taken, the taking of mov¬
ing pictures upon the negative films, the transfor-
renee thereof to the positive films, the manufac¬
ture of the projecting machines, and the supply¬
ing of films to exhibitors.

The royally of $2 per licensed machine per week
to be paid by licensed exhibitors, as provided in
the license given by the Patents Company to the
film rental agencies, was, by agreement between
the licensed manufacturers and the Patents Com-

llfi

( Affidavit of James J. Lodge.)

puny, divided as follows : A percentage — I do not
remember whether it was 14 per cent, or 24 per
cent. — was divided among all the licensed manu¬
facturers in proportion to the quantity of nega¬
tive film produced by them respectively ; tlio bal¬
ance of the fund was to bo, and, to the best of my
knowledge, was, turned over to the Patents Com¬
pany for the payment of legal expenses involved
in bringing and defending numerous litigations
over patents and arising out of the various stops
and proceedings taken by the Patents Company to
, . - secure control of the situation.

The officers of the Patents Company, and par¬
ticularly Mr. Dyer and Mr. Kennedy, repeatedly
assured the licensed manufacturers that it was
only a question of time when the Patents Company
would control the whole situation, which would
accrue to the benefit of all the manufacturers.

The projecting machines upon which the above-
mentioned royalty of $2 each per week is exacted
from exhibitors, are, to a large extent, machines
that had boon bought outright by exhibitors or
rental agencies during the past ton years or more,
and the exaction of the royalty upon machines,
348 which in many instances had for many years been
owned outright by agencies or exhibitors, was
simply an arbitrary exaction, illustrating the at¬
titude which the Patents Company and the li¬
censed manufacturers had taken toward the busi-

J. J. Lonon.

Sworn to before me this]

15tli day of December, 1911. j
Wm. A. Young,

Notary Public No. 4, >

New York County.

G heater New York Film Ren¬
tal Company, I

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,

Defendants.

State and County op New York, ss. :

Abraham Carlos, being duly sworn, says:

I live at 1517 Washington Avenue, in the Bor¬
ough of the Bronx, City of New York, and am
engaged in business as an exhibitor of motion
pictures at 5780 Third Avenue, in the Borough
of the Bronx, City of New York. My place is
licensed by the Motion Picture Patents Company,
and I hold a license signed by that Company au- ^5 1
thorizing mo to carry on business as an exhibitor
of licensed motion pictures, and am required to
display the license in a conspicuous place in my
theatre. I have two projecting machines, which
are also licensed by the Patents Company.

I have dealt with the Greater New York Film
Rental Company, the plaintiff in this action, since
April, 1910, obtaining licensed film from that
company, and am still dealing with it.

Before April, 1910, I obtained licensed film
from the Imperial Filin Exchange, a rental agen-

118

3j2 ( Affidavit of Abraham Carlos.)

ay engaged in business in the Borough of Man¬
hattan, City of New York. I have done bitsinoss
with that agency since December, 1908, and con¬
tinued to do business with it until April, 1910,
at which time I was notified by the Motion Pic¬
ture Patents Company that the license of the Im¬
perial Film Exchange had been cancelled, and
that I must not lease any more film from that
concern.

Whenever the license of a rental agency is can¬
celled, immediate notice of the fact of cancellation

353 is given to all licensed exhibitors, warning them
not to take any more film from that agency.

I have known one A1 Harstin during the past
three or four years. Ho conducted a rental ex¬
change before the organization of the Motion Pic¬
ture Patents Company, and was one of those who
did not obtain a license from the Company. lie
handled independent or unlicensed film for some
time after the organization of the Patents Com¬
pany, and then went out of business and closed
his agency.

During the past three or four months, I have
known Harstin as an agent or solicitor for the

354 General Filin Company, and ho is well known
throughout the trade in that capacity, and deals
with many licensed exhibitors in behalf of the
General Film Company.

On or about November 20, 1911, said Harstin
called upon mo at my place of business, and told
me that the license of the Greater New York Film
Rental Company had been cancelled, and that
within a week or so it would get no more films,
and he urged mo to make a contract with the Gen¬
eral Film Company for film, and said that if I
would make the contract immediately I could get

( Affidavit of Abraham Carlos.) 333

a better contract than if I waited until after the
Greater New York Company had lost its license,
because there would bo so muny of the customers
of the Greater Now York Company applying to
the General Film Company for film that those
who name early would get the best “runs.”

I was taking the fourth and fifth “runs” from
the Greater New York Company, and Harstin told
me that the General Film Company could take just
one more customer iit that time for those “runs,”
and that if I would make a contract immediately
I would get those “runs,” and that ho could not 356
promise them to me if I waited another week.

I told him I would take the chances, and refused
to make a contract with the General Film Com¬
pany.

Beginning in the early part of November, 1911,
there had boon frequent rumors that the Greater
Now York Film Rental Company would soon lose
its license, and I know several exhibitors who had
boon dealing with the Greater New York Com¬
pany who became frightened and left it, and made
contracts with the General Film Company.

Although, as is well known in the trade, the
prices charged by the General Film Company for 357
its films have generally been higher than those
charged by the Greater Now York Company, yet,
during the last two months, tile General Film Com¬
pany has offered lower prices to customers of the
Greater Now York Company for the purpose of
inducing them to change. It has offered better
“runs” for the same prices ns exhibitors wore
paying for less desirable “runs,” and has also
offered to supply “specials” — that is, additional
reels over and above those regularly supplied—
without additional cost, although it charges its

120

( Affidavit of Abraham Carlos .)

regular customers extra for the “specials,” as
does the Greater New York Company.

It has been generally believed in the trade tlint
these inducements were offered merely to entice
away the customers of the Greater New York
Company, and that after the General Film Com¬
pany had got control of them the prices would be
raised.

A. Carlos.

Sworn to before me this 35th)
day of December, 1911. J
Raphael Betll,

Notary Public,

N. Y. County, No. 109.

360

121

SUPREME COURT,

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,

Defendants.

State and County of Neiv York, ss. :

Samuel P. Weissmann, being duly sworn, says:

I live at 1327 Forty-third Street, in the Borough
of Brooklyn, City of New York, and am engaged
in business as an exhibitor of motion pictures at
2138 Eighth Avenue, in the Borough of Manhat¬
tan, City of New York.

I have dealt with the Greater Now York Film
Rental Company, the plaintiff in this action, for
about three years, leasing licensed film from it for
exhibition in my place. I am licensed by the Mo:
tion Picture Patents Company as an exhibitor.

Early in November, 1911, my recollection being
Hint it was between the fitli and lltli of November,
one A1 I-Iarstin, whom I have known for three
or four months, and who is and was, at the time of
his talk with me, and for several months before
that, an agent of the General Film Company, came
to mo at my place of business, and told me that the
Greater New York Film Rental Company would

364

(Affidavit of Samuel P. Weissmann.)

soon lose its license, that the license was about
to be cancelled by the Motion Picture Patents
Company, and I10 urged me to make umuigoinoiilo
through him with the General Film Company for
a supply of licensed Him for exhibition in my
place of business.

Before this conversation, Ilarstin had called
upon mo several times, and tried to induce mo to
leave the Greater Now York Film Rental Com¬
pany and got my film from the General Film Com¬
pany. Ho represented the Waters Agency, which

365 was controlled by the General Film Company,
and he assured me that I would get better service,
and I10 offered me a better “run " than I was get¬
ting, for the same money I was paying to. the
Greater Now York Company. Such contracts
are only made from week to week, and there would
be nothing to prevent the General Film Company
from raising the prices after the first week. I
refused to change, however.

At the conversation in November, Ilarstin said
I would better make arrangements immediately
with, the General Film Company, because if I de¬
layed another week I would not bo able to get as

366 good a deal and could not be sure of as good
“runs”, as I could have if I made arrangements
then. Ho said that the Greater New York Film
Rental Company would get no more films after
Saturday, November 18th.

I declined to make any arrangement with the
General Film Company.

It is generally known throughout the trade that
the only remaining licensed rental agency in the
City of Now York, excepting the General Film
Company, is the plaintiff, the Greater New York
Film Rental Company.

123

(Affidavit of Samuel P. IVeissmann.) 367

Within the past two and a half years there have
been a number of such licensed exchanges in the
City of Now York, but they have all been absorbed
by the General Film Company, which is operat¬
ing the various exchanges under the former
names.

Before the organization of the Motion Picture
Patents Company, there wore more rental
agencies in the City of New York than after the
organization of that company, because it was gen¬
erally understood that the Company refused to
license a number of the former agencies. 368

Samuel P. Weissmann.

Sworn to before mo this)

10th day of December, 1911. J
Raphael Brill,

Notary Public,

N. Y. County, No. 109.

369

SUPREME COURT,

NEW YORK COUNTY.

Greater New York Film Ren¬
tal Company,

Plaintiff,

against

Motion Picture Patents Com-
37 1 pany and others,

Defendants.

State and County of New York, ss. :

Gustavus A. Rogers, being duly sworn, says :

I am one of the attorneys for the plaintiff in
this action, which is about to he begun by the is¬
suance of the accompanying summons.

The attorneys for the plaintiff are Messrs.
Rogers & Rogers, whose office and Post Office
372 address is 1G0 Broadway, in the Borough of Man¬
hattan, City of New York.

An order to show cause, returnable in less than
five days is asked for because it is of urgent im¬
portance that the motion to continue the injunc¬
tion be heard without delay.

The next term of this . Court at which this cause
can be tried is appointed to be held in New York
County on the first Monday of February, 1912.

125

( Affidavit of Gustavus A. Rogers.) 373

No previous application has been made to any
Court or Judge for a temporary injunction hero¬
in, or for an order to show cause.

Gustavus A. Rogers.

Sworn to before, mo this!
lfith day of December, 1911. J
Raphael Brill,

Notary Public, No. 109,

New York County.

375

January 21, 1916,

Messrs . Holdon and Lanahan:

I wish you would draft up to-day, so
that it can be gotten to Mr. Edison not later than tomorrow, a
memorandum showing the exact conditions under which the settlement
was made with Pox, and also what each manufacturer, the 0. P. Co.,
and the M. P. P. Co. got in the way of releases as a matter of future
protection. Please send me copy of said memorandum.

I am going out of town, to be gone until Monday, and
am anxious that Mr. Edison should know at onoe what this settlement

CHW/IWW

°- ht'

Us£ l

Mr. Vr'ils on:-

January 31, 1916.

m SETTLEMEHT GREATER MOT YORK FILM RFHTAL CO.
vs. GEHERAL FILM COMPAHY et al.

The settlement fin the above matter was effected Jan¬
uary 1916 on the following basis:

The sum of §300,000 was paia to William Fox as Presi¬
dent of and on behalf of the Great Hew York Film Rental Company,
the said sum being contributed equally by each of the following
named parties, that is, §30,000 each: General Film Co., Vita-
graph Company of America, Motion Picture Patents Company, Thomas
A. Edison, Inc., Salem Company, Lubin Manufacturing Company,
Essanay Film Manufacturing Company, Selig Polyscope Company,
Pathe Freres, and Biograph Company. The Lubin and Selig Com¬
panies gave notes instead of cash.

'The Edison Company received a check from the Greater
Hew York Film Rental Company amounting to §4.20 in settlement
of the Edison, Ino. account against the Greater Hew York Film
Rental Company*

A release dated January 19, 1916 was duly executed in
approximately thirty copies by the Greater Hew York Film Rental
Company, William Fox, Eva Fox and Michael Fox. Mr. Holden in¬
sisted that an executed copy of this release be delivered to him
before turning over the check of Thomas A. Edison, Ino., and such
a copy was so delivered. This copy ie in Mr. Berggren*s files.
The other copies were placed in the hands of Mr. George F. Soull
to be delivered to. the several defendants upon the execution of

oertain releases running to the Greater Hew York Film Rental
Company and William Fox ana to he executed hy certain of the
defendants. We have delivered to Mr. Soull the following
releases :

General Release dated January 19, 1916 of Greater Hew
York Film Rental Company and William Fox hy Thomas a. Edison,
Inc.

General Roloase dated January 19, 1916 of Greater Hew
York Film Rental Company and William Fox hy Edison Manufac¬
turing Company.

Copies of these releases are on file with Mr. Berggren. The
release received hy us and now on file with Mr. Berggren runs
to various corporations and individuals named therein and in¬
cluding the following: Thomas A. Edison, Inc., Edison Manu¬

facturing Company, Frank I. Dyer and William Belzer. it is ex¬
pected that each of the releasees will ultimately receive an exe¬
cuted copy of this release. This release also extends to all
offioers or employees now or heretofore oonneoted with the said
several corporations with respect to oertain acts. The Greater
Hew York Film Rental Company also relinquished any olaim or right
it may have had under any contract to he supplied with film hy
any of the licensed manufacturers named in the release. For the

exact terms of this document, reference should he made to the
original.

-3-

Y/hile the release of the defendants was signed by
offioers of the Greater How York Film Rental Company and by all
of its stockholders, there were also resolutions adopted at a
stockholders meeting and at a directors meeting, authorizing the
execution of the roleaso, and certified copies of these resolu¬
tions are on file with the General Film Company,

Provision was made for the discontinuance of suit, and
I understand that a stipulation was entered into by the attorneys
for the respective parties providing for the entry of an order for
this purpose. Hr. Scull is familiar with this feature of the
matter.

There was also an agreement entered into between the
Greater Hew York Film Rental Company and the General Film Company,
whereby the General Film Company, for the payment of $60,000 in
twenty- five promissory notes of S2000 each, payable on Jan. 86,

1916 and each of the twenty-four weeks thereafter, purchased from
the Greater Hew York Film Rental Company the latter’s entire stook
of motion picture film, eta., and took over oertain leases and also
assumed certain liabilities of the Greater Hew York Company. For
the exact terms of this agreement, reference should be had to the
copy thereof.

During negotiations leading til the above settlement,
a preliminary agreement was made between the manufacturers to
subscribe a fund amounting to $300,000, to be contributed to
equally by the following companies, namely: General Film Co.,

-4-

Vita graph Company of America, Motion Pioture Patents Company,
Thomas A. Edison, Inc,, Kalem Company, Bubin Manufacturing Co.,
Essanay Film Manufacturing Company, Selig Polyscope Company,
Pathe Ere res, and Biograph Company, which said fund was to he
placed in the hands of Messrs. Albert E. Smith, Frank J. Marion
and Jeremiah J. Kennedy as Trustees, and to he used to pay any
final judgment which may ho obtained in the suit or to effect
a settlement. Inasmuch as a settlement was actually made the
next day, namely, January 19, 1916, thiB agreement became of no
importance. A copy of the Bame O.K.M by Mr. Edison is on file
with Mr. Berggren.

HL-JS

%'(- 13

. Hr. Berggren:-

January 31, 1916

BE SffiffiffiEHEHT GRINDER DEW YORE El HI RPH3?aX, CO. va
GEITERAB EIIM CQMPAIIY ot al. 0 VS*

During the negotiations leading to the above settlement,
a preliminary agreement was made between the manufacturers to
subscribe a fund amounting to §300,000, to be contributed to
equally by tho following companies, namely: General Film Com¬
pany, Vitagraph Company of America, Motion Picture Patents Co.,
Thomas A. Edison, inc., Ealem Company, lub in Manufacturing Co.,
Essanay Film Manufacturing Company, Selig Polyscope Company,

Rathe Erores, and Biograph Company, and to be placed in the
hands of Messrs. Albert B. Smith. Erank J. Marion, and Jeremiah
J. Kennedy as Trustees, and to be used to pay any final judgnent
that might be obtained in the suit or to effect a settlement.
Inasmuch aB the Battlement was aotually made the next day, namely, ’
January 19th, this agreement became of no importance. However,"

I hand you a copy of the same which should be filed with, the
other papers relating to this matter. This copy is of Importance
because it has boon O.K.'d by Mr. Edison, and Mr. Wilson ahd Hr.
Holden consider it as evidencing their authority to make tk
settlement finally entered into. ' -

Kindly acknowledge receipt of this paper.

HL-JS

Legal Department Records
Motion Pictures - Case Files

Motion Picture Patents Company v.

Independent Moving Picture Company of America

This folder contains material pertaining to the suit brought by the Motion
Picture Patents Co. against the Independent Moving Picture Co. in the U.S.
Circuit Court for the Southern District of New York. The case was initiated in
February 1 91 0 and involved the alleged infringement of Woodville Latham's
U.S. Patent 707,934. The selected items are from the complainant's record
and consist of the index, bill of complaint, and testimony of William K. L.
Dickson.

[PHOTOCOPY]

PAGE

Bill of Complaint . 1

Replication . g

Testimony.

Fred A. Dobson,

Direct

William Main,

Direct .

Eugene Lauste,

Direct .
Cross . .
Redirect
Recross .

William K. L. Dickson,

Direct .

Cross-examination

Redirect .

Recross

Raphael Retter,

Direct . .

Redirect

Recross

Woodville Latham,

Direct .
Cross . .
Redirect
Recross

117

119

120

144

1S4

1SG

190

215

210

219

25S

329

330

Emil W. Kleinert, '

Direct

[PHOTOCOPY]

Frederick A. Anthony,

Direct .
Cross . . .

Thomas W. Stephens,

Direct .
Cross . .

Harry B. Marvin,

Direct .
Cross . .
Bedirect
Kecross

Parker W. Page,

Direct .

Frank B. Waterman,

Direct
Cross .

Thomas Armat,

Direct
Cross .

370

379

3S4

400

402

403

407

40S

447

511

504

Papers referred to and reproduced:

Jenkins Letter of April 25, 1890 . 552

Jenkins Letter of Ang. 30, 1895 . 553

Jenkins Letter of Aug. 8, 1895 . 557

Extract Jenkins Letter Sept. 7, 1895 . 559

Extract Jenkins Testimony in Armat Case . . 501
Extract from Jenkins Becord . 509

Complainant’s Exhibits:

Latham Patent in Suit . 10 700

E. & H. T. Anthony & Co., Assign¬
ment . 11

Anthony & Scovill Co., Assignment. 11 01

Mutoscope & Biograph Co., Assign¬
ment . 11 58

Ansco Co., Assignment . 12 07

iii

Complainant’s Certificate of Incor-

^ poration . 12

Drawing of Defendant’s Camera ... 15 720

Warwick Camera . 40

Certified Copy of Latham Drawings 79

Lauste’s Deposition in Latham-Casler

Interference . SO

Lauste Photograph . 117

Lauste Sketch of First Taking Ma¬
chine . 119 722

Film of Grififo & Barnet Fight . 130

1 i Better 1S97 Deposition . ISO

Woodville Latham’s'' Deposition in

Armat Interference . 220

Otway Latham’s Deposition in Ar¬
mat Interference . 220 031

Gray Latham’s Deposition in Armat

Interference . 220 078

Otway Latham Bote of Experiment 224
Article in Sunday Mercury, May 5,

1S95 . 237

Clipping from Sun, April 22, 1S95 . . 239

Colt Bills and Letter . 255

Latham Exhibit Bo. 7 . 250

Clipping from Chicago Inter-Ocean . . 258

Latham’s British Patent, 1890 . 2S8

Bill of Boston Gear Works . 029 344

Eastman Kodak Co. Bill, Feby. IS,

1S95 . ’ . 029

Eastman Kodak Co. Bill, April 5,

1S95 . 030

Eastman Kodak Co. Bill, April 27,

1895 . 030

Decision of Court of Appeals in Ar¬
mat Interference . 031

[PHOTOCOPY]

Circuit Court of the United States

Southern District of New York.

In Equity,
No.

Patent No.

707,934,

Latliam.

To the Honorable the Judges of the United
States Circuit Court for the Southern
(District of New York :

The Motion Picture Patents Company, a cor¬
poration organized and existing under the laws
of the State of New Jersey, and haying a regular
and established place of business at New York
City, in the County and State of New York, brings
this its bill of complaint against Independent Mov¬
ing Picture Company of America, a corporation
organized and existing under the laws of the State
of Illinois, and having a regular and established
place of business at No. Ill East 14th Street, in
the Borough of Manhattan, City of New York,

Motion Picture Patents Com-
i ^Complainant,

.Independent Moving Picture
Company of America, .

Defendant.

[PHOTOCOPY]

County and State of New York, within the South-
orn Judicial District of New. York, within which
district, as well as elsewhere throughout the United
States the acts of infringement hereinafter com¬
plained of have been committed.

And thereupon' your orator complains and says
that it is informed and believes, and therefore
avers, as follows:

I. That prior to the 1st day of June, 1896, one
Woodville Latham, a citizen of the United States,
residing in the City, County and State of New
York, was the first original and sole inventor or dis¬
coverer of certain new and useful improvements
in projecting kinetoscopos, which were not known
or used by others in this country before his in¬
vention or discovery thereof, and not patented or
described in any printed publienton in this or any
foreign country, before his invention or discovery
thereof, or more than two years prior to the ap-
plication below mentioned, and not in public use 01
on sale in the United States for more than two
years prior to his said application, and not aban¬
doned by him; and that the said Woodville Latham
duly made application for letters patent of the
United States for the said invention or discovery
on or about the 1st day of June, 1S96, in accord¬
ance with the then existing laws of Congress.

II. That thereafter by certain mesne assign¬
ments in writing, duly executed and delivered, and
duly recorded in the United States Patent Office,
the E & H. T. Anthony & Company, a corpora¬
tion of the State of New York acquired the entire
ri„l,t title and interest to the said invention or
discovery in projecting kinetoscopes and in and to
qnirl armlication for letters patent, and to nny

letters patent which might be granted for the said 7
invention or discovery, which said assignment or
a duly certified copy thereof is ready to be pro¬
duced in Court/If your Honors so require.

III. That after the requirements of the then
existing laws of Congress had been duly complied
with in all respects by said applicant and his suc¬
cessors in interest, letters patent of the United
States numbered 707,931, signed, sealed and exe¬
cuted in due form of law, for the said invention
or discovery, were granted in the name of the said
Woodville Latham aS assignor to the said E. & H.

T. Anthony & Company on the 26th day of August, 8
1902, whereby, there was secured to the said E. &

H. T. Anthony & Company, their successors, legal
representatives and assigns, for a term of seven¬
teen years from the said date, the full and exclu¬
sive right of making, using and selling, and of caus¬
ing tp be made, used and sold throughout the
United States, the said improvements in projecting
kinetoscopes, as by said letters patent, or a duly
certified copy thereof, to be produced in Court will
more fully and at large appear.

IAr. That, by certain mesne assignments in writ- g
ing, duly executed and delivered and duly record- >
ed in tile United States Patent Office, all the right,
title and interest in and to the said invention or
discovery in projecting kinetoscopes, and in and to
the said letters patent therefor, including the right
to sne for and collect all damages and profits there¬
tofore accrued by reason of past infringements ot
the said letters patent by the manufacture, use or
sale of apparatus embodying the said invention or
discovery, passed to and were acquired by your or¬
ator; and your orator is now the full and exclusive

[PHOTOCOPY]

«'

owner of said letters patent and all rights there¬
under, as by said assignments or duly certified
copies thereof to he produced in Court will more
fully and at large appear.

Y. That the utility and validity of said inven-
■ions and said letters patent have been widely recog¬
nized and acquiesced in by the public, and that
pour orator and its predecessors have expended
great efforts and large sums of money introduc¬
ing said patented invention into practice; and that
your orator and its predecessors have enjoyed, and
but for the infringements hereinafter set forth and
others similar thereto would still he enjoying all
the benefits and advantages of the said invention.

VI. That your orator and its predecessors have
riven 'due notice to the public of the grant of said
letters patent No. 707,934 and of its rights tliere-
ander, in the manner prescribed by law.

YU. That the defendant has well known all the
facts hereinbefore set forth, but contriving and
conspiring with others to injure your orator and
to deprive it of the profits, benefits and advantages
whicli might and otherwise would have accrued to
your orator from the said patent, has, since the
date of its issue, and also since the acquirement of
the said letters patent by your orator, without the
license of your orator and against your orator’s
will and in violation of its rights, made, used and
sold and caused to be made, used and sold, and
now continues to make, use and sell, within the
Southern District of New York and elsewhere in
the United States moving picture apparatus, each
of which embodies the invention or discovery de¬
scribed and claimed in your orator's said patent
707,934, the exclusive right to make, use and sell

which is by law vested in your orator as aforesaid ;
and the said defendant in disregard of your
orator’s rights refuses to pay to your orator the
profits which it has made by such unlawful manu¬
facture, use and sale or to desist from further in¬
fringement of the said patent; all of which acts
are in violation of your orator’s rights and are
contrary to equity and good conscience and tend
to the manifest injury of your orator in the prem¬
ises.

VIII. That by reason of the said unlawful acts of
the defendant, your '■orator has suffered and still
suffers great and irreparable loss and injury, and
lias been deprived and is being deprived, of great
gains and promts which it otherwise would have
received and enjoyed, hut which have been received
and enjoyed by the said defendant; that the said
defendant intends and threatens to continue such
infringement and is prepared and ready so to do ;
and that your orator is unable to state how many
machines employing the invention described and
claimed in the said patent have been unlawfully
made, used or sold as aforesaid by the said defend¬
ant, and is unable to state the. extent of the profits
received and enjoyed as aforesaid by the defendant
from such unlawful making, using and selling, but
that your orator believes the same to have been
very large and prays a discovery thereof. .

IX. Your orator therefore prays :

1. That the said defendant, Independent Moving
Picture Company of America, may be required to
make, according to the best of its knowledge, in¬
formation and belief, full, true, direct and perfect
answer (not however under oath, which is hereby
expressly waived) to all matters hereinbefore

[PHOTOCOPY]

16 stated and cliarged the same as if specifically inter¬
rogated as to each.

2:That a writ or writs of subpoena ad respond¬
endum may issue from and under the seal of this
Court, directed to the said defendant, Independent
Moving Picture Company of America, commanding
it to appear and answer unto this bill on a day cer¬
tain therein to be named, and to' abide by and per¬
form such order or decree in the premises as to this
Court shall seem meet and as may be required by
the principles of equity and good conscience.

17 3. That the defendant, Independent Moving Pic¬
ture Company of America, may be decreed to ac¬
count for and pay to your orator the profits unlaw¬
fully derived as aforesaid from the violation of
your orator’s rights; and that upon entering the
decree against the defendant your Honors may as¬
sess or caused to be assessed under your direction
the said defendant’s unlawful profits, and in addi¬
tion thereto the damages sustained by your orator
by reason of the said infringement; and that your
Honors may increase the actual damages so as¬
sessed to a sum equal to .three times the amount

IS thereof under the circumstances of the unlawful
and unjust infringement.

4. That a writ of injunction may be issued out of
and under the seal of this Honorable Court, per¬
petually restraining and enjoining the said defend¬
ant, Independent Moving Picture Company of
America, its agents, attorneys, officers, clerks, em¬
ployees, servants and workmen, from any further
manufacture, use or sale in any manner of the said
patented improvements, or any part thereof in vio¬
lation of your orator's said rights; and that the

infringing devices in possession of or use by the de¬
fendant may be decreed to be destroyed or de¬
livered to your orator for that purpose.

5. That a provisional or preliminary injunction-
may be issued out of and under the seal of this
Honorable Court restraining and enjoining the
said defendant, Independent Moving Picture Com¬
pany of America, its agents, ' attorneys, officer's,
clerks, employees, servants and workmen from any
further manufacture, use or sale in any manner of
the said patented improvements or any part there¬
of, pending this cause. *»

6. That such other and further relief may be
granted and decreed to your orator as the equities
of tlie case may require and as io your Honors
may seem meet.

MOTION PICTURE PATENTS COMPANY,

By George F. Scull.

Secretary.

Keiir, Page, Cooper & Haywood,

Solicitors and of Counsel for Complainant.

Parker W. Page,

Of Counsel.

State of New' Jersey.

George F. Scull, being duly sworn, deposes and
says :

I nin Secretary of the Moving Picture Patents
Company the complainant corporation named m

[PHOTOCOPY]

22- the foregoing bill of complaint; I. turn read the
said bill of complaint and of my own knowledge
know it to be true, except as to the matters there¬
in stated to be alleged upon information and be¬
lief, and as to those matters I believe it to be true.

GEORGE F. SCULL.

• Subscribed and sworn to be¬
fore me this 9tli day of
February, 1910.

Anna R. Klehm,

23 Notary Public,

State of New Jersey,

Commission expires June, 1913.

CIRCUIT COURT OF THE UNITED STATES,
Southern District op New York.

Motion Picture Patents Com¬
pany, i

Complainant, l

Independent Moving Picture l
Company op America, 1
Defendant.

The replication of the above-named complainant
to the answer of the above-named defendant.

The repliant, saving and reserving to itself all
and all manner of advantage of exceptions winch

may be had and taken to the manifold errors, un- 25
certainties and insufficiencies of the answer of said
defendant, for replication thereunto saith that it
does and will aver, maintain and prove its said
bill to be true, certain and sufficient in the law to
be answered unto by said defendant, and that the
answer of said defendant is very uncertain, evasive
and insufficient in the law to be replied unto by
this repliant; without that, that any other matter
or thing in the said answer contained material or
effectual in the law to be replied unto, confessed or
avoided, traversed or denied, is true; all which
matters and things tjiis repliant is ready to aver,
maintain and prove as this Honorable Court shall 23
direct, and humbly prays as in and by its said bill
it has already prayed.

Dated, New York, Hay 11th, 1910.

KERR, PAGE, COOPER & HAYWARD,

Solicitors for Complainant.,

[PHOTOCOPY]

New York, April 10, 1911, 11 A nr

Met pursuant to adjournment at the offices of
Kerr, Page, Cooper & Hayward, 149 Broadway
New York City.

Present-PARKER W. PaGE, Esq./ Counsel for Com¬
plainant. Mr. Bichard Eyre, Counsel for De¬
fendant.

WILLIAM K. It. DICKSON, a witness called on
behalf of the Complainant, having been first duly
sworn, deposes in answer to interrogatories by
Complainant's Counsel, as follows:

Ql. Please state your name, age, residence and
occupation?

A. W illiam Kennedy Laurie Dickson, Consult-
ing Engineer, 4 Denman Street, Piccadilly Circus,
London. I am 49 years of age.

Q2. Have you ever known personally Mr. Wood-
ville Latham?

A. Yes.

Q3. When did you first become acquainted with
him?

A. In the early part of 1894..

Q4. What was Mr. Latham’s business or occupa¬
tion at the time you knew him?

A. When I first became acquainted with him, 363
he was interested in the purchase of Edison kineto-
scopes and made such purchases from Mr. Edison
at that time. It was in my province to exhibit the
machines to purchasers and so I became acquaint¬
ed with that gentleman and his sons.

Qo. Was Woodville Latham a scientific man?

Mr. Eyre: Objected to as irrelevant and
immaterial.

A. Yes. .

_ ever have any other business rela¬

tions with Mr. Latham in connection with moving 363
picture apparatus other than that which you have
stated in a preceding answer? and if so, will you
please state fully what your relations with Lira

Mr. Eyre: Objected to as it appears to
bring new matter into the case which is not
proper rebuttal testimony and notice is
given that at the proper time motion will
be made for leave to take testimony in reply
to this or any similar line of testi-

[PHOTOCOPY]

'William K. L. Dickson.

William K. L. Dickson.

mony or to expunge the same from the
record, and it is agreed that this objection .
be made now once for all to any testimony
of this character.

A. As a brief preamble, prior to answering these
questions in full, X would like to say that a few days
ago, I read for the first time Mr. Woodville
Latham's testimony in an Interference in the
Patent Office under the head of Woodville
I.atham vs. Thomas Armat and found same to my
intense surprise, incomprehensibly vindictive.
Had I known of this testimouj', nothing would
have kept me from coming over and correcting such
statements, as I hope now to do, hoping that this
may not be out of place.

As stated before, I met Mr. Woodville Latham
for the first time in the early part of (to the best
of my knowledge) 1894, when he came to the
Edison Laboratory to purchase six or more kineto-
scopes which he intended to use for exhibition
purposes in New York. I found Mr. Latham to be
a congenial spirit, owing to his scientific attain¬
ments and our friendship grew and throughout
such acquaintanceship, we spent many evenings dis¬
cussing the scientific questions of the day. One
subject, however, was rigidly taboed, namely, mov¬
ing photography. Professor Latham, I believe,
was a man of letters, Professor at a Virginia
College or University, a lecturer in Physics.
Shortly after my meeting him at the Edison
Laboratory, I invited him to my home and to cut
this testimony as short as possible, I will now give
the salient points that I presume may be of interest
iu this testimony, namely, Mr. Woodville Latham,
shortly after I had made his acquaintance, asked

me to recommend him a good mechanician without
stating what he wished him for. I recommended a
late employee of Mr. Edison, whom I knew to be a
thoroughly capable man in his line. A week or so
later, Mr. Latham called at my house, thanked me
for the recommendation, remarking, that he
was just the man he wanted, and then for the first
time, disclosed that he wished to carry out some
idea he had in moving photography. This rather
took me aback and I told him that I should never
have recommended anyone to him had I known for
what purpose he wished to use this mechanician. 36S
However, the deed was done and there was nothing
more to be said. Mr. Woodville Latham then did
bis best to persuade me to come and join forces
with them. This I steadfastly declined, owing to
the fact that my position and interest with Mr.
Edison were entirely satisfactory to me, and that
the Latham proposition at that time was an un¬
known quantity. Sometime in October, 1894, Mr.
Woodville Latham and his two sons, Messrs.
Otway and Gray Latham, accepted an invitation
to dine at my house, at 106 Cleveland Street,
Orange, N. J. and after the guests had all left, Mr. gqg
Woodville Latham and his two sons made a propo¬
sition to me, in the presence of my wife, which was
untenable, which, however, was modified and to
which I agreed heartily, namely, that, as Mr.
Woodville Latham was desirous of going into
public exhibitions of the kinetoscope, using same
for projecting purposes, if on trial, it proved satis¬
factory, I should use my best endeavor to persuade
Mr. Edison to give them the exclusive right for this
special branch of the business, and that if I suc¬
ceeded, I should have a substantial interest, subject
Of course, to Mr. Edison’s approval. I signed such

a letter, which was approved of by my wife, whose
sense of right and wrong naturally was of the
highest order.

I immediately set to work and arranged to make
a trial at Columbia College, with the courtesy and
in the presence of the Professors and one or two
other gentlemen, Woodville Latham and his sons
being invited. All the commercial kinetoscopes,
were in use but I was able with some parts of an
obsolete machine, to demonstrate and prove to my
own satisfaction and that of Mr. Latham, and the
others present, that if I succeeded in persuading
Mr. Edison to make such a contract as previously
stated, regarding the use of the Edison film and
kinetoscopes, possibly with slightly increased open¬
ing in the shutter, and as intensely concentrated
light as possible, all would be well. The short film
and mechanism were, of course, replaced in Mr.
Edison’s laboratory and the next morning X did my
best to persuade Mr. Edison to grant these gentle¬
men this privilege. Mr. Edison, however, pointed
out to me that he had already bound himself to
Messrs. Bnff & Gammon. I need not say that my
disappointment was intense and I called on Mr.
Woodville Latham to acquaint him of my failure.
It was then I learned from this gentleman that
they intended therefore, to go into this whole busi¬
ness themselves and that he was going to carry out
some ideas he had and construct machines to pro¬
duce negatives and positives for projecting pur¬
poses. It is stated in the Woodville Latham-
Armat testimony, among other things, that I was
in his employ. This nonsensical, and for some
hidden purpose, vindictive remark, I must emphati¬
cally deny, and while I have the opportunity, wish

to state that at no time was X ever in Mr. Wood¬
ville Latham’s employ, nor gave him any sugges¬
tion or ideas in connection with moving photo¬
graphy. I note in thq Woodville Latham testi¬
mony that there is a mention of a Dickson Stop
Mechanism which was experimented on and failed.
The truth of the matter was simply this: That
during one of our many scientific discussions, he
caught me napping and I asked him if he had seen
a curious stopping device for actuating a clock¬
work, which I described not having the slightest
intention ait the time that he should use this for
the work on which he was engaged. I was careful
not to ask him what he was doing or what his
mechanism was, as I wished my relations with him
to remain purely social. Mr. Latham seemed to
jump at the conclusion that this would be most
useful. I, however, pointed out to him I fancied
it would be far too slow for his purpose, and that
I certainly did not wish him to bring me into this
business unless I decided to leave Mr. Edison and
join them, which at present I had not the remotest
idea of doing. During the months of December,
1804, and January, 1895, I had several opportuni¬
ties of visiting on invitation, a shop which they
had in New York and saw that they were in full
swing, making so-called modified kinetoscope pro¬
jectors. At the same time, they were working on
an apparatus for taking negatives. I particularly
avoided examining same and cannot testify as to
the construction of this same mentioned taking
machine until I received an invitation from Mr.
Woodville Latham to come over as quickly as
possible as he had something particularly interest¬
ing to show me. On arriving on the scene, I found
Mr. Otway Latham, Mr. Gray Latham, Mr. Eugene

[PHOTOCOPY]

Lauste and another workman very much excited
and they proceeded to show me every detail ot the
before mentioned taking machine. A short piece
of film was tried and I was asked to develop same
which I did. Mr. Otway Latham for some hidden
reason, asked me to write a note dictating the
words “To my friend Woodville Latham, Compli¬
ments of W. K. L. Dickson,” etc. If his object was
to compromise me, he very nearly did succeed and
so I fell into the trap, for as previously stated,
throughout all these proceedings, neither by word
7 or action, did I have anything to do with their
work. After this, I thought it best to have as
little to. do with them as possible, until I had made
up my mind if I should join them or not. The
crisis came on April 2nd, 1895, when I was accused
by an individual then in the employ of Mr. Edison,
to the effect that my relations with Messrs. Latham
were not honorable, etc. etc. That person had the
pleasure of being confronted with Mr. Edison by
me and asked to repeat the remarks he made to
me. Mr. Edison’s remark was, “I don’t believe a
d— word of it.” I then insisted on Mr. Edison
> making his choice betu'een the aforementioned
person and myself, but either owing to Mr. Edison
having contracted with this person, allotting to
him full power or whatever it was, and the decision
not being sufficiently whole-hearted, I lost my
temper and resigned on the spot. The date, as
previously given, was April 2, 1895. I then joined
my own company, the Portable Electric Light &
Power Company, and throughout the time I was
engaged in this company, Messrs. Latham received
from me occasional visits and towards May, I as¬
sisted in the taking of a glove contest on the roof of
Madison Square Garden.

Before closing this preamble, I might add, that
I notice in the Latham testimony, that a certain
amount of stock in the Lambda Company was given
me. This is quite incorrect. The true facts of the
case were these. Mr. Woodville Latham insisted
in forcing this stock on me and which I as persist¬
ently refused, there being no quid’ pro quo, as long
as I was engaged with Mr. Edison and not having
done anything for the Latham Company. Until I
left, I could not, of course, take something for noth¬
ing. As I was still towards the last undecided,
if I should join them or not, at the advice of my 3S0
solicitor, Mr. Edmond Congar Brown, of New
York, I sent Mr. Latham to him and learned after
that Mr. Brown decided in my interest to hold such
stock in trust, pending the time that I should de¬
cide to join them.

In conclusion, to this rather lengthy preamble, I
am fortunately able, even although I. learn with
much regret, that the Messrs. Latham have passed
on, to give an account of themselves elsewhere, that
I have other witnesses who can substantiate all I
have said in regard to the personal slander which
I need not say, has very much upset me. 381

.1 take this opportunity of apologizing, at the
same time thanking Counsel on both sides, for their
kind indulgence.

Counsel for defendant states that he is
hardly in a position to accept the thanks of
the witness as he feels that he must now ob¬
ject to the answer as being incompetent, as
bringing in reference to testimony which
has not been given in this case and which
cannot be duplicated in this case, since it

res:

382 _ Wiliam K. L. Dickson-. _

appears that Latliam, whose prior testimony
in Interference was criticised, is dead. The
answer is further objected to as irrelevant
and immaterial.

Becess.

After Becess.

Q7. You state in your last answer that you were
employed by Mr. Edison in 1894 or 5. In what de-
3S3 pertinent were you at Mr. Edison’s place?

A. The Electrical Mining or Milling Department
and the Moving Picture Photographic Department.

QS. How much experience did you have with the
apparatus and the processes practiced in the Mov¬
ing Picture Department?

A. In 1SS7, Mr. Edison ashed me if I under¬
stood photography. I replied I did, also the chem¬
istry of photography. He then proposed to start a
department in which I was to have exclusive
charge developing liis ideas in moving photography,
which I did from that time on until I left him.
gsi Q9. And you left him, ‘as I understand it, April
2, 1895?

A. That is right.

Q10. You have also referred to seeing a camera
or taking machine in Woodville Latham’s shop.
I wish you would now state in as much detail as
you can the exact circumstances connected with
the incident, giving as far as you are able, the dates
when you first saw that machine sufficiently to
understand its construction?

A. I received a' letter of invitation from Mr.
Woodville Latlmm a month or so before I left Mr.
Edison in which letter Mr. Woodville Latham

[PHOTOCOPY]

129

_ William K. L. Dickson. _ 355-

urged me to come over as soon as possible to see
what they had accomplished, I found those present
Mr. Otway Latham, Mr. Gray Latham and Mr.
Eugene Lauste, a workman. There may have been
others, but I do not remember, except that I un¬
derstood Mr. Woodville Latham was not well on
that evening, as I recall. In the centre of the room
or shop the taking machine, which I was aware
had been worked on for some time past, was ap¬
parently finished, judging before I was shown the
interior by the general excitement of those present.

- f i With a flourish the cover was lifted displaying an

T upright mechanism composed, to me as first im-

! pression, of endless rollers, sprockets, etc. On ex¬

amination and witnessing the run made by Mr.

I . Eugene Lauste, Mr. Otway Latham assisting in

threading a piece of (what appeared to be)

I spoilt film, I noticed that this piece of film

I was passed over a sprocket wheel, the film being

i held in place by a roller pressing against the

j sprocket wheel holding the film in position. Prom

I this sprocket a loop was formed and passed to a

second sprocket, the film being similarly held in
position by a roller, the film was next carried 387
through a window gate. Below the window gate
• the film was passed over a sprocket wheel, the film
held in position by another roller. From this
u ^7 sprocket wheel the film formed a loop and was plac-

i ' ed over a fourth sprocket wheel again similarly

! held by a roller. I noticed that next. to the lowest

sprocket wheel, which I might count as the third
sprocket wheel, was rigidly attached to a Maltese
cross stopping device which I understood at the
time was to be their method of stopping and start¬
ing the film. This third sprocket wheel was fast-

[PHOTOCOPY]

130

William K. L. Dickson..

131

William K. L. Dickson.

oned in some way with the second sprocket wheel
immediately above the gate and the two outside
sprocket wheels 1 and 4 were similarly attached.
After running through this short piece of black'
appearing film the box was taken into the dark room
situated at the end of the shop, and Mr. Otway
Latham and one other, presumably Mr. Eugene
Lauste, threaded the machine with some sensitive
unexposed film. This was brought out of the dark
room and the question arose how to make a record
on this film. X found, however, that it had been
settled to photograph the filament of an incandes¬
cent lamp and someone present suggested swinging
same during the exposure. I was asked to turn the
handle, I stupidly did, and further adding to my
stupidity by not being able to see through their
purpose, developed for them a short piece of the
exposed film in the previously mentioned dark
room, tearing off a piece of about six inches long,
the result being a sharply focused and clearly de¬
fined image of the carbon filament standing out in
black relief against a more or less mottled back¬
ground. Mr. Otway Latham wished his father, who
was ill at the Bartholdi Hotel, to have that night
the first sample and asked me to pin this to a piece
of paper, he himself dictating the words which I
remember perfectly to be “To my friend Woodville
Latham, compliments of W. K. L. Dickinson.” I
should not have remembered the exact date and
hour of this note had not my memory been refresh¬
ed by reading Mr. Latham’s testimony but I am
absolutely certain that in every detail this event
took place at midnight or thereabouts a month or
more prior to leaving Mr. Edison, which date as we
know was April 2, 1893.

Qll. Where was the shop where the above oc¬
currences took place?

A. I can only remember it was a broken down
looking place in Franklin Street, New York, the
shop, however, seemed to be well equipped.

Q12. Will you describe a little more fully the
location of this shop which you say was on Frank¬
lin Street?

A. I am afraid that that is more than my mem¬
ory will assist me in at this late date, but owing to
the circumstances connected with this to me more
or less disagreeable business the name of Franklin
Street is deeply impressed on my mind.

Q13. Was this in New York City?

A. New York City, yes.

Q14. Can you tell where that street was located
with references to some central point say the City
Hall?

A. I am afraid I cannot. It certainly was in the
lower portion of New York. •

Qlo. Mr. Lauste has given testimony in this case.
Were you present at the time that he gave his de¬
position? .

A. X was.

Q16. Lauste says that' the Latham shop was on
Frankfort Street. Was he mistaken in this?

A. Mr. Lauste was quite right. It was certainly
Frankfort, now that the matter is brought to me.

Q17. Did you in writing the note at Mr. Otway
Latham’s dictation attach any date to it?

A. I did, both date and hour.

Q18. Was the date which you wrote that of the
day on which the experiment was tried?

A. Yes, about 10 minutes after the short piece
had been developed, and in fact the piece of film

[PHOTOCOPY]

132

394 _ Wiliam K. L, Dickson.

"•us lying on a piece of blotting paper at our side.

Q19. I show you now tbe sketch Mr. Lauste made
at the time of giving his deposition in this case and
which is in evidence as Complainant’s Exhibit
Lauste Sketch. Will you please state in what re¬
spects, if any, that sketch illustrates the construc¬
tion of the feed mechanism of the camera as you
saw it on this occasion at the Frankfort Street shop
to which you have just testified?

A. The sketch I hold in my hand is undated and
395 pm'porting t0 be a sketch made on the Hotel Bre-
voort letter head, the sketch representing a scries
of rollers and sprocket wheels and a side sketch of
a Maltese-cross stop motion. This I was aware had
been drawn and put in evidence at the time of
Lauste’s testimony. The sketch appears substan-
tially to be what I observed at the time but I do not
recollect the exact mode of attaching the various
sprocket wheels together and presume this was
substantially what I saw with the exception of a
roller which is drawn on the top of the first
sprocket wheel. This I did not, see at the mid-
. night test.

39G Q20. Using this sketch as a matter of conveni¬

ence, will you please state how the first and
fourth, that is the upper and lower sprocket wheels
in the taking machine as you saw it at the time of
the midnight experiment were driven; that is to
say, was their motion intermittent or continuous?

A. I am sorry I cannot help you very much in re¬
gard to this for I do not remember the exact method
adopted at that time to run these said mentioned
first and fourth sprockets. They were, however,
working in unison continuously, not intermittent¬
ly, and presumably belted or geared as shown in
the sketch, which is quite likely.

William K. L. Dickson.

Q21. I did not mean to inquire as to the specific
devices for driving them, but only as to the charac¬
ter of their motion, and as to this your answer is
■what?

A. That the first and fourth sprockets shown in
the sketch and as seen by me at that time were
running continuously and not intermittently.

Q22. And how was it with the second and third,
or the two intermediate sprockets, what was the
character of their movements?

A. Intermittently running sprocket wheels.

Q23. Did you make any estimate at the time of 393
the rate at which you operated this camera?

A. Yes, and in fact we had a lively discussion
and I think my estimate was accepted, as being per¬
haps the only one present who could judge, though
roughly, of the speed at which the picture, was
token, which I estimated, considering how the
machine was geared, to be about half the speed at
which we ran the Edison kinetograph, which
kinetograph was run about 40 to the second.

Q24. As to the conditions of operation and finish
of the machine on the night in question, what have
you to say? 399

A. I am afraid very litle, if anything, but I
never saw that machine again for some time after
I had ieft Mr. Edison. The machine, however, ap¬
peared to be constructed on two uprights with the
rollers and sprockets one above the other, the gate
or film carrier being centralized between the four
rollers, two sprockets above and two below.

Q25. Was the machine on the night when you
first operated it in such condition that it could be
used practically for the talcing' of moving pictures?

Objected to as calling for a mere conclu¬
sion and indefinite.

[PHOTOCOPY]

134

400 _ _ William IC L. Dickson,

A. I felt convinced and somewhat troubled that
we had a serious competitor especially so on exam¬
ining the consecutive views of the filament swaying
lamp. I examined the film closely with a lens and
found perfect definition, and except for a slight
halation due to the intensity of the light filament,
but I considered at the time that the machine
would answer the purpose for which it was intend-
. ed.

Q2G. You have spoken of assisting in photo-
40! graphing a glove contest on the roof of the Madison
Square Garden. Do you remember the names of
the contestants in this contest?

A. I do. Griffo and Barnet.

027. Do you remember when this contest took
place?

A. Shortly after I left Mr. Edison.

Q28. You do not recall the precise date'’

A. I do not.

Q29. What machine did you use for taking these
pictures? ’

A. The same that I tested on the lamp filament.
Q30. You mean the machine you first used at the
402 Frankfort Street shop?

A. Yes.

Q31. Was the machine when you used it for
photographing the Griffo and Barnet fight in the
same condition as when you photographed with
it the swinging incandescent lamp in the Frank¬
fort Street shop?

A. Yes, but with the exception that I added, or
suggested that they should add, a supplementary
roller on the upper sprocket wheel. The effect of
this roller, I judged, would be to allow the film to
have a 'better grip on the teeth of the sprocket

135

' William K. L. Did: son, ,no

wheel. In other words, I made this suggestion to
obviate any possible tearing out of 'the perfora¬
tions, as they were intending to use a very neavy
film.

Q32. And this supplementary roller you think
was in the machine when you photographed the
Griffo and Barnet fight?

A. Yes. This roller I judged necessary and my
suggestion was carried out a day or two before the
fight, tested and proved efficient.

Q33. You heard Lauste’s testimony on this point
and you do not agree with his recollection of it? *04
Objected to as imporper, the witness
should simply testify, to his own recollection
without reference to what Lauste may have
said.

A. I recollect his testimony, being present, ana
would have corrected it at the time but naturally
I should have been out of order. The roller was
placed on the machine a day or two before the
fight.

Q34. Do you recall how much film you used in
photographing the Griffo-Barnet fight. 405

A. Not from recollection as to the specific
amount used, but it seemed to me it was a very
large and heavy roll, sufficient to take several
rounds or bouts.

Q35. Approximately how long was that film if
you can state?

A. I am unable to state correctly the length as
I did not measure it, but remember it took a very
long time to reel it up in the dark room, the reel
appearing to be seven or eight inches or perhaps
more in diameter.

Q3G. How did the width of film used in this ma¬
chine compare with that manufactured by Edison
for use in liis kinetoscope?

A. It was considerably wider than the Edison
kinetoscope film.

Q37. Have you preserved any specimen of that
film and if so, will yon please produce it?

A. I have. I now hand you a film which I found
among my film collection in London purporting to
he a piece of film of the Griffo-Barnet fight taken
on tlie roof of Madison Square; size without per¬
forations inch and a half by three quarters of an
inch, which I hand in evidence.

Q3S. That is to say, the size of the pictures is an
inch and a half by three quarters of an inch?

A. Yes.

Q39. Has this film been trimmed, that is to say
the edge cut off?

A'. Yes.

Q40. Did it originally hare perforations on each
side? >

The piece of film produced by the witness
is offered in evidence and marked Complain¬
ant’s Exhibit Film of Griffo and Barnet
fight.

Q41. Do. you know what, became of this taking
machine after it was used for photographing this
Griffo and Barnet fight?

A. I do not. As I left very shortly after the tak¬
ing of this picture, not being satisfied with Messrs.
Latham methods as far as I was concerned, join¬
ing the Mutoscope and Biograph Company, of
which I became a member. The only explanation

[PHOTOCOPY]

1ST

_ William K. L, Dickson. _

I can give why these gentlemen testified later in
such a vindictive manner was perhaps due to my
leaving them high and dry and joining the Bio¬
graph Company.

Q42. Have j’ou had any experience in reading
the drawings of patents illustrating mechanical
devices?

A. Yes.

Q43. Please look at the patent to Latham which
is here in suit and Complainant’s Exhibit Latham
Drawings which is a full sized reproduction of the
original drawing of that patent, and consider par- 410
ticularly Figs. 2 and G of that patent, and state,
as far as your present recollection will permit, how
the taking machine which you used to photograph
the swinging incandescent light in the Latham
shop on Frankfort Street, and afterwards used to
photograph the Griffo and Barnet fight, differed
from or resembled the machine which is illustrated
in the figures to which I have called your attention?

A. Fig. 2 purports to be a projecting kinetoscope.

I cannot say very much about it although I know
they were working on something of this order.

Fig. 6 is called a projecting kinetoscope. Fig. G 411
shows practically what I saw at that date as far
as concerns the arrangement of sprockets and roll¬
ers illustrating an upper and lower loop, but this
illustration G is not as I saw it at that time. For
some reason or other the teeth are omitted on num¬
ber 55 and the film did not pass over the roller set
so far back ns 5G. This evidently was drawn some¬
time after, and the roller 56 which I devised is
taken on 46, answering, however, almost the same
purpose. In the machine that I tested at the time,
the film came straight down. I notice in the

sketch, although indicated, the stop motion is not
illustrated except in Figure 5, which naturally be¬
longs to this apparatus of Fig. 6. While called a
projecting kinetoscope naturally could also be
called a taking machine.

Q44. Do you know what became of that taking
machine which you used to photograph the Grififo
and Barnet fight?

A. I haven’t the remotest idea.

Q45. How long after you left Mr. Edison April
2, 1895, were you associated in any way or nego-
413 tiating with Mr. Latham and those interested with
him?

A. I do not remember being associated with the
Lathams even after leaving Mr. Edison, except in a
friendly way to give them a helping hand whenever
I could, such as the taking of the Griffo-Barnet
fight, for the simple reason that I soon became dis¬
gusted with their business methods as previously
stated and sought other fields. , Had they behaved
as gentlemen I most likely should have thrown my¬
self heart and soul into the work, taken up the stock
held in trust by my soliiitor and joined them in
444 their work. It is fortunate, however, that I did
not, and therefore authorized my solicitor to re¬
turn them the stock.

Q46. Did you ever have any conversation with
Mr. Woodville Latham after you left Mr. Edison
on the subject of moving picture apparatus?

A. Yes.

Q47. What did you find as to the extent of his
information on this subject?

A. I found him to be well conversant with the
art as far as it went at that time and thought he
was capable of originating new ideas and might
arrive at some good work outside of what he bad

[PHOTOCOPY]

139

William K. L. Dickson-. _ 4ig

already accomplished and even then_ hesitated if
I should throw in my lot with him; his person¬
ality and that of his sons, however, knocked that
on the head.

Answer objected to as incompetent being
merely 'the opinion of the witness as to
possible capacity of Latham to produce hy¬
pothetical results at some time.

Adjourned to Tuesday, April 11, 1911, at 11
o’ciock A. M. 416

New York, April 11, 1911, 11 A. M.

Met pursuant to adjournment.

Present: Counsel as before.

Examination of Mr. Dickson continued:

Q48. How long before you took the pictures of •
the swinging incandescent lamp in the Frankfort
Street shop, had you any knowledge of the camera
used on that occasion and what was the extent of 417
that knowledge?

A. I am afraid I cannot be of very much use in
giving you any description or exact dates, but to
the best of my knowledge I wns aware that a
taking machine was in process of construction
shortly after Christmas, or to be absolutely cer¬
tain, we might say during the early part of Jan¬
uary, 1895.

Q49. How did you Obtain this knowledge?

A. I remember calling on Mr. Woodville Latham
at the shop in Frankfort Street about that time.

timeT Did 3 °U Sl!e thiS macllille in the shop at that

A. I did, and Mr. Lanste was busy with same, i
could not, of course, nor did I feel it right to ex-
amine any of the work, as long as I was not con¬
nected with them.

Q51. What kind of a man was Professor Wood-
, e Latham? Please tell ns anything that you
know about the character of his attainments, in¬
genuity or the like, that yon may hare observed
lg during your acquaintance with him?

Objected to as incompetent. The making
of a specific invention cannot be proved by
evidence as to character and attainments. '

A. I found in Mr. Woodville Latham a congenial
spirit as stated before, in os far as scientific at¬
tainments were concerned. Our discussions were
mostly based on general physics and what be him¬
self had accomplished in his life in regard to what
lie termed “inventions” and various ideas he had.
He spoke of different apparatus that be had in-
0 vented, but, of course, I do not know if there were
any patents. It struck me that he was highly
theoretical and his anxiety was that I should join
forces with him in this particular work he was
then engaged on. This, of course, being out of the
question, other subjects were more fully discussed
and I must say I was mncli impressed, being per¬
haps a little younger at that time, with the
amount of information he had acquired.

Q52. Have you known Eugene Lauste for a long
time? °

A. Yes.

Q53. When did you first know him?

[PHOTOCOPY]

141

_ William E. L. Dickson. _

A. Eugene Lauste worked at Mr. Edison’s lab¬
oratory for several years as mechanician, engaged
in work of precision such as electrical apparatus
for Mr. Edison and then left, seeking employment
at the Edison Ore Milling Works at.Odgen, New
Jersey, which he found distasteful and remained
out of employment some time. It was at that time
that I recommended him as a skilled mechanic to
Mr. Woodville Latham, he, Mr. Woodville Latham,
not disclosing to me what he wished this mechanic
to do for him, as already stated.

Q54. Do you know whether Lauste, at the time
he entered Mr. Woodville Latham’s employ, had
had any practical experience with moving picture
apparatus?

A. None whatever. In fact, no one was per¬
mitted to come within the sanctum sanctorum of
the moving picture department. I notice that in
Mr. Lauste’s testimony he states that he did see the
exterior of a kinetoscope and I remember the cir¬
cumstance very well. I issued a general invita¬
tion to everyone in the laboratory to. view n scene,
perhaps one of the first, if not the first, in a rough
box-cabinet shaped kinetoscope, the subject being
“horseshoeing.”

Qoo. Did you ever impart to Mr. Latham direct¬
ly or through any other source any of the features
of construction which you found embodied in his
camera when you examined the same at the Frank¬
fort Street shop on the occasion of photographing
the swinging incandescent lamp?

A. Decidedly and emphatically, no, neither by
word or action.

Q56. Prior to tlie night when you photographed
this swinging incandescent lamp at the Frankfort
Street shop, had Mr. Latham ever expressed to you

any satisfaction or dissatisfaction with Lauste':
work for him?

A. He expressed himself as being very well satis
fled with Mr. Lauste and stated that the work was
going on beautifully, or something to that effect.

Q57. What nationality is Lauste?

A. French born, a Parisian.

Q58. Does be speak English fluently?

425

Mr. Eyre: Objected to as incompetent,
and as not the best evidence.

A. No, in fact, it has always been a surprise to
me why the English language was so difficult. The
only explanation I can give is that his bump of
languages must be represented by a cavity.

Q59. Did Mr. Latham ever give you any intima¬
tion of whether Lauste was carrying out his,
Latham’s, ideas in the work that he was doing for
him?

Mr. Eyre : Objected to as secondary evi¬
dence.

A. Yes, he seemed to be always very pleased and
thought that Mr. Lauste was a most capable mech¬
anician and just the manjie wanted (to quote liis
own words) to carry out liis ideas.

Direct-examination closed.

Mr. Eyre : In view of the fact that the
only apparent purpose for the testimony of
this witness, and certainly the main purpose
of his testimony is, to make an attempt to
prove some early date of alleged invention

[PHOTOCOPY]

by Latham and in view of the further fact
that the only testimony thus far adduced by
the complainant, relating to the camera for
taking machine to which the witness has re¬
ferred, has been testimony to the effect that
the alleged invention was made by Lauste
and not by Latham, the right is reserved to
call for the production of the. witness for
additional cross-examination in case
further testimony should be offered tending
to show the malting of the alleged invention
by Latham specially if it tends to show any 428
disclosure of the invention by Latham to
this witness; and the testimony of this wit¬
ness is objected to as irrelevant and imma¬
terial unless such further testimony be ad¬
duced.

Counsel for Complainant replies that he
perceives neither the point nor propriety of
the above objections and states that all of
the facts and knowledge in his possession
with regard to the invention .of the patent
in suit by Latham is now in the posses¬
sion of counsel for defendant, counsel
for defendant having yesterday stated 4 9
that he had in his possession a copy
of the Interference proceedings in the
case of Latham vs. Armat. Counsel
further states that Woodville Latham, his
two sons, Otway and Gray Latham are dead
and this fact will be duly proved. If there
are any other living witnesses capable of
. testifying with regard to the making of this
invention by Latham, Counsel for Com¬
plainant has no knowledge of their where¬
abouts, although a most diligent search has

[PHOTOCOPY]

144

William K. L. Dickson.

145

William K. L. Dickson-. _ _ 433

been made to ascertain if there be any sncli
witnesses. Having all the facts before him
which counsel for Complainant knows of or
believes to be pertinent, counsel for Defend¬
ant is at liberty to proceed in the usual
course followed in such cases.

Cross-examination de bene esse :

XQGO. In giving the date, April 2nd, 1895, as
the date when you left Edison, are you basing your
, 431 statement upon your personal recollection?

A. No.

XQG1. What are you basing it on?

A. I have a copy in my possession of my resig¬
nation to Thomas A. Edison, witnessed by my fore¬
man, who was present at the time, the document
reading in the usual form, dated April 2nd, 1895,
and witnessed; which document I can show, on
demand.

XQG2. Did your resignation take effect at once?

A. At once, although I had one or two inter¬
views unofficially with Mr. Edison within the next
432 day or two> 111 order to clear things up which I
stated before was done to my and Mr. Edison’s
entire satisfaction.

XQG3. You moved your belongings from the
Edison Laboratory that same day?

A. Oh, no.

XQG4. How long after?

A. There was no desperate hurry and my belong¬
ings were few, if any, with the exception of a few
personal photographs that I had taken of my wife,
sister, niece, dog, I forget if there was a cat pic¬
ture ; otherwise, I do not think there was anything
else. These wore removed within the next day or

two, to my house, at 16G Cleveland Street, Orange,

New Jersey.

XQ65. Did you go to the Edison Laboratory at
at all after the first week of April, 1895?

A. No, but to Mr. Edison’s house on one occa-

XQGG. After April 2nd, 1S95, what occupation,
did you engage in and when did you begin?

A. I joined a small company which I formed
with Mr. Llewellyn H. Johnson, which we termed
the Portable Electric Light & Power Company. '
XQG7. When was that company first formed? 434
A. It was more in the order of a partnership be¬
tween that gentleman and myself, he, the financier,

I, the technical adviser. This I acquainted Mr.
Edison with, and hoped even then, if needed, would
have his support. About that time however, I met
my old friend of early Edisonian days, Mr. H. N.
Marvin, and being thoroughly disgusted with the
business methods of the Lathams, after taking the
Griffo-Barnet fight I threw up both the matters and
joined Mr. Marvin in a new moving .photographic
venture. This took place, to the best of my recol¬
lection, about two months after I left Mr. Edison. 435
Begarding the Portable Electric Light & Power
Company, so-called, we were more or less depend¬
ent upon the Chloride Accumulator Company for
a specific kind of plate, which I had designed.

Mr. Gibbs, the General Manager, came to my house,
at Orange, New Jersey, and that of Mr. Johnson, to
arrange for these plates and general contracts. Mr.
Johnson was then allowed to carry this on, if he
chose, when I joined, as stated before, Mr. H. N.
Marvin, and his associates.

XQ68. My question was only as to when the

Portable Electric Light & Power Company was
formed, and I do not think you have told me yet.

A. I did state that it was a partnership more
than a company, but for convenience sake, we
called ourselves a company.

XQG9. Well, that docs not tell me when the
partnership which for convenience, was called a
company, was formed?

A. I don’t know that I can give any exact date.
It was certainly within a week or ten days of my
leaving Mr. Edison that Mr. Johnson and I ar¬
ranged this so-called Company.

XQ70. Before or after?

A. After.

XQ71. What, if you know, has become of Mr.
Johnson?

A. I haven’t the remotest idea.

XQ72. What was the last that you know?

A. Sometime in that same year, 1895.

XQ73. What was his then location and occupa¬
tion?

A. Mr . Llewellyn H. Johnson lived in East
Orange and was connected with tiie Bicycle Heli¬
cal Tube Company. v

XQ74. What did you and Mr. Johnson, using
this company name, intend to do?

A. Portable storage battery lamps for mining
purposes and general portable use under a patent
which I took out at that time for a parabolic re¬
flector and current controlling device.

XQ75. That was the only business you had in
mind for your partnership?

A. That was the only business we had in mind.

XQ7G. Just what did the business methods of
the Lathams have to do with your deciding to give
up this partnership venture with Mr. Johnson?

147

William K. h. Dick non. _ _

A. Neither the business methods, so-called, of
the Lathams nor my relations with Mr. Johnson
had anything to do with my decision to- join an old
and trusted friend, namely, Mr. H. N. Marvin. I
found, as stated before, with regard to the John-
son-Diekson combination, that ns we depended al¬
most entirely on very light plates for portable
purposes to work in conjunction with my patent
lamp, we were disappointed that Mr. Gibbs could
not produce a sufficiently light plate to give us the
capacity required so we were forced to abandon
that particular plate and look elsewhere. This took 440
some time and we allowed the matter to drop pro
tem, until such time as we could find a light plate.
Meanwhile, I made several of these lamps which
were used with the heavier battery provided by the
Chloride Accumulator Company. As for the Lath¬
ams, I gave them such help as I deemed necessary,
such as taking the same old picture, recited several
times in this evidence and as I got to. know them
better, it was quite clear to me that further asso¬
ciation with them would be distasteful. Mr. Mar¬
vin and Mr. Edmond Congar Brown, my solicitor,
were my business confidants and they agreed with ^
me not to go too fast, as far as binding myself to
the said Lathams, and as stated before, I joined
Mr. Marvin as a certainty and I have had nothing
to regret since that decision. What has been done
with my patent lamp, I do not know, I do not care.

XQ77. You have stated (answer to XQG7)
“About that time, however, I met my old friend
of early Edisonian days, Mr. H. N. Marvin, and
being thoroughly disgusted with the business
methods of the Lathams , after taking the Griffo-
Barnet fight, I threw up both the matters and join,
ed Mr. Marvin in a new moving photographic ven-

[PHOTOCOPY]

442

William K. L. Dickson.

n your last answer tlmt this
it entirely correct or as you

ture.” I judge fron
quoted statement is »

'Timust confess I do not quite see what you
are driving at. I certainly preferred to deal with
a remunerative and agreeable business and the of¬
fer was such that X considered at the time it was
best for me to accept Mr. Marvin's offer.

XQ7S. How long did you continue associated
with Mr. Marvin’s Company?

, A. Until the present date. The association still

413 continues, under the heading of K. M. C. D. Syn-

d XQ79. What relation, if any, has that company
with the Biograph company or the same company

or predecessors under different names?

A. There was naturally no name given just at-
that time hut shortly after we met together with
two other friends of Mr. Marvin in Canastota, >-eu
York to dub the syndicate, K. M. C. D. Again
shortly after the Mntoseope Company was formed,
followed by the title The Mntoseope & Biograph
Company. >

XQSO. And what is the present name of the con¬
cern with which you are connected?

A. To be more explicit, the It. M. C. D. was the
parent syndicate in which we had our various in¬
terests allotted. All other companies throughout
the world, under the head primarily of the Muto-
scope Companies and later of the Mntoseope & Bio-
graph Companies were owned or controlled by the
parent K. M. C. D. syndicate.

Kecess.

XQ81. When you say that the Portable Electric
T.irrht & Power Company was more of a pnrtner-

119

; f

William K. L. Dickson. _ 445

ship than a Company, do you mean that there
were no company organization papers filed?

A. To the best of my knowledge, that is right.
Nothing was filed.

XQ82. What, if anything, occurred' after No¬
vember, 1894, and prior to the time that you saw
the pictures of the swinging incandescent lamp af¬
fecting the character of your relations, either with
Mr. Edison or with the Lathams?

A. There was nothing that could have affected
either my relations with Mr. Edison or with the
Lathams, if looked at in the proper light. 41 ’

XQ83. Did anything occur during that interval
which made you feel any differently as to your
duties or loyalty in connection with Mr. Edison?

A. Nothing.-

XQ84. X have understood from your testimony
that while you were at the Latham shop, at times
prior to the swinging light episode, you were care¬
ful in view of your connection with Mr. Edison, to
avoid learning the details of what was being done
in the Latham shop, but that at the -time of the
swinging light episode, you permitted all details
of the camera to be shown and explained to you. 447
If I have stated correctly, will you please explain
why you were willing to examine this camera, etc.
on the later occasion and not willing to learn what
was going on on earlier occasions?

A. You have stated this quite correctly and the
simple explanation is that the showing of the com¬
plete camera was forced1 on me and it was then- or
about that time that I was trying to make up my
mind if I should go into the exhibition business or
not. For that reason, I thought it wise to see what
they had.

XQ85. Have you retained in your possession the

[PHOTOCOPY]

A. No, I have not.

XQ8G. Did you destroy it and if so, when.

A. When I removed to England from my home
in Orange, there was a general clean-up, of course,
and presume all useless stuff was destroyed.

XQ87. Do you believe it was destroyed then?

XQSS How long had you had it in mind before
the time that you saw the swinging incandescent
4(19 lamp photographed that you might go into the ex-
hibition business?

A. As explained some time back, it was my in-
tention with Mr. Edison’s approval, to go into or
participate in the exhibition business, Edison
manufacturing, Latham to have the right. This, as
explained previously, could not be granted, owing
to a contract Mr. Edison had made with Messrs.
Kaff & Gammon; after that I was quite undecided
what to do. I did not enter into any agreement
with the Lathams. .

XQ89 At the time of the swinging lamp episode,
,.n you knew that if you should connect yourself with
the Lathams, it would be as a competitor to Edi-

might connect yourself with the Lathams, were
you not?

A. Yes, though very doubtful.

XQ91. When you say, that because you were at
that time trying to make up your mind whether or
not you should go into the exhibition business, you
therefore thought it wise to see what the Lathams
had, you mean, do you not, that you were trying to

make up your mind whether to go into the business
with them?

A. Yes.

XQ92. How long had you been considering go¬
ing into the business with the Lathams as com¬
petitors to Mr. Edison?

A. Hard to tell. Off and on, X suppose, for
some months.

XQ93. Probably as early as the time that Mr.
Edison declined to make any arrangement with the
Lathams?

A. No. <

XQ94. How many visits did you pay to the Lath¬
ams’ shop prior to the swinging light episode?

A. Difficult to say.

XQ95. For what purpose did you make these
visits?

A. My visits to Mr. Woodville Latham at the
shop or at the Bartholdi Hotel or Mr. Woodville
Latham’s visit to my house were more or less so¬
cial. In these visits the constant refrain was
“Come with us, work with us. I will make your
fortune.” If the question is leading to, if I gave
any instructions or was connected with them in .
any way as to giving ideas or assisting them, this
may be dismissed once and for all, this not being
the case.

XQ96. This constant refrain of the Lathams as
to your coming with them related to moving pic¬
ture business all through, did it not?

A. It did.

XQ97. After your first talk with Mr. Edison,
suggesting a possible arrangement with the Lath¬

ams, when did you next talk with Mr. Edison
about what the Lathams were doing?

A. There was no talk with Mr. Edison after that,
for quite some time. . ...

XQ9S. “For quite some time” is very indeflmtc.
Give me the best idea you can as to ',owlo"Slt"ns-
A. Possibly about two mouths or so before I left,
in which I told him that we might have a competi¬
tor in the Lathams. I think Mr. Edison s answer
was a shrug of the shoulders.

XQ90. Prior to April 2nd, 1S95, did you tell Mr.
Edison anything as to the camera you had seen and
the picture of the swinging light?

A. No, decidedly not.

XO100. When the Lathams forced you to look
at* this camera, they knew yon were working for
Edison. Did they ask you to promise to keep the
information secret?

XQ101. Who was the individual who accused
yon to Mr. Edison of having had dishonorable re¬
lations with the Lathams?

A W. E. Gilmore. _

XQ102. What was it that he said to Mr. Edison
about you, so far as you knoy?

A I do not know, except that I had some iela-
“B tion with them, inferring that there was something
incorrect in those relations.

XQ103. Why didn’t you tell Mr. Edison what

you had seen at the Lathams’ shop?

A Had I done so, I think it would have been
incorrect. X could only say, as X did, as stated
previously, that we may have in these people a
competitor. . ..

XQ104. Wasn’t it at least a reason for not tell¬
ing him the fact that you were then thinking you
might join the Lathams and it would be to your
interest if such event occurred, not to have Edison

_ 'William 1C, L, DicJcson. _ _

know what had been done in the Lathams’ shop
any sooner than possible?

A. There is a good deal of truth in what you say
but the thought of joining did not occur until some
«tiwe after. I commenced to realize on- the night of
the lamp test when I was invited to see that they
were seriously engaged, that I might join in the
exhibition branch of the business w-hich had been
lost sight of by Edison in putting out the kine-
toscopes.

XQ105. Do you mean by your last answer that it
was some time after the night of the swinging light 458
test that you first thought of joining the Lathams?

A. It was on the night of the test.

XQ10G. It was on the night of the test that you
first thought of joining the Lathams.

A. I first seriously thought of joining the
Lathams.

XQ107. But, you had been thinking of joining
them for several months— perhaps less seriously-
had you not?

A. No, I cannot say that, if at all, feebly.

XQ10S. Your visits to the Latham shop were
generally in the evening, were they not?

A. Naturally. •

XQ109. When you visited the shop, did you fre¬
quently talk to Lauste in French?

A. Occasionally, of course.

XQ110. How large a shop was it?

A. Not very large.

XQ111. Well, give me the best idea you can.

A. I have very little recollection of the size, pos-
sibly about 12x15, or maybe more.

XQ112. Was it all one room?

A. There was a small dark room at one end.
XQ113. But there was no separate office?

A. Yes, there was a sleeping room, it I remember
right which answered the purpose of, I presume,
office, dining room and bedroom.

XQ114. That was where Lauste slept, wasn’t it?

A. I believe so.

XQ115. What was the name of the street that
was deeply impressed upon your mind?

A. Franklin or Frankfort.

XQ116. You are not sure which, are you?

A. Yes, quite sure, since I was reminded. It was
not Franklin but Frankfort.

XQ117. What were the business actions of the
Lathams that made you find it impossible or un¬
desirable to make any definite connection with
them?

A. In deference to the death of all three parties
concerned, namely, Mr. Woodville Latham and his
sons, Gray Latham and Otway Latham, I do not
think it would be necessary, if you can do without
the answer, to push this question further.

XQ118. I am sorry, but under the circumstances
of the case, I do not feel like yielding to the rea¬
sons you give and mustmsk you to answer the ques-
2 tion.

A. My idea that morals and business should go
hand in hand decided me, and as these gentlemen
were not leading the sort of life that I was brought
up to believe in, it made me feel that the less I had
to do with them, the better.

XQ119. Do I understand that your last answer
has relation rather to the personal morals of the
Lathams than to the business actions about which I
asked?

A. I do.

XQ120. Please understand that I have not the

463

_ William K. L. Dickson, _

slightest desire to drag into this ense the personal
morals of anyone and have not asked you that. In
your answer to Q45, you said, that you “soon be¬
came disgusted with their business methods.”
What business methods were there that you be¬
came disgusted with?

A. Nothing definite or no definite proposition
was made as to our future relations, should I join.

XQ121. You have not answered my question,
which asked, what the business methods were that
yon referred to in your answer to Q45 ns having
become disgusted with.

A. As stated in my last answer, no definite ar¬
rangement as to fees could be reached.

XQ122. And was this the business method that
you were referring to as being disgusted with?

A. When I made that answer, it was principally
coupled with an answer I made previously which
was, as I understand now, not intended to be
drawn from me by you.

XQ123. Then so far as the actual business acts
of the Lathams were concerned, there was really
nothing you were disgusted with?

A. In addition to what I said, I didn’t consider 405
that they were businesslike.

XQ124. Didn’t they make you any definite
proposition with relation to how you would benefit
by joining them?

A. I presume you mean in regard to the shares
which they endeavored to force on me during my
engagement with Edison with the distinct, to me,
object of compromising me. This perhaps, may
add something towards my meaning “disgusted
with their business methods.”

XQ12S. When did they force this stock upon

[PHOTOCOPY]

156

William K. L. Dickson.

A. Or tried to— to tlie best o£ my recollection,
this was shortly after the memorable lamp test.

XQ12G. Hadn’t yon bad any previous agree¬
ment of any kind with the Lathams or any of them,
either written or verbal?

A. None whatever, except the one mentioned in
my preamble.

NQ127. Did that agreement set ont a definite in¬
terest in the business for you?

A. No. •

XQ128. Did the letter that you signed at your
467 house in October, 1894, state that it was subject to
Hr. Edison’s approval?

A. The agreement, if it is desirable to call it so,
was contained in two or three lines, to the effect
that I would use my best endeavors to persuade
Mr. Edison to give them the exclusive rights to use
the Edison film for projecting purposes and that
should I succeed, I should have a substantial inter¬
est from the proceeds of such exhibitions. At that
time, there was no thought other than that Mr Edi¬
son should supply these films.

XQ129. Did Mr. Brown hold the stock for you in
,fi8 trust by virtue of any trust agreement or other
document which would specify the terms on which
it would be delivered tovyou?

A. None whatever, to my knowledge, unless my
legal adviser got them to do something of that kind,
pending my decision.

XQ130. He took this stock before you left Edi¬
son, did he not?

A. Yes, to hold or to return, as the case might
be.

XQ131. And how was that to be decided?

A. As already explained, if I found that the ex-

137

William K. L. Dickson.

hibiting business would pay best, naturally I had
the choice.

XQ132. Without your paying anything for it,
and without having received any consideration
from you, the Lathams had insisted upon giving
Mr. Brown this stock in trust for you and you
could have it delivered to you at any time you de¬
sired. Is that a correct statement?

A. No, quite incorrect. Mr. Brown’s object was
to bold the stock so os to insure my future the mo¬
ment I left Mr. Edison. The Lathams’ object, how¬
ever, was to try and force the stock on me, for me 470
to accept same s during my sojourn with Edison,
presumably to compromise me and force me to
join them ns quickly as possible. Had I accepted
the stock, I should have had to join the Lathams
before knowing if the business were good or bad.

XQ133. Which part of my statement is incor¬
rect?

A. I mean that the incorrect part of this relates
to my receiving stock without a quid pro quo. The
stock was to be my remuneration for joining them
and as I stated before, they tried to get me to take
■ this stock before I had accomplished anything for
them, their object being to get me to leave Mr. Edi¬
son forthwith.

XQ134. Didn’t you authorize Mr. Brown to hold
the stock for you?

A. Yes and rightly too.

XQ135. Then during the following month, while
Mr. Brown was holding this stock, which you could
demand the delivery of at any time, you continued
working for Mr. Edison, undecided whether to take
the stock and leave him or whether to direct the re¬
turn of the stock and stay with him. Have I got
that much correct?

[PHOTOCOPY]

472

158

William K. L. Dickson.

A. Quite right.

XQ13G. Then when you left Mr. Edison on April
2nd, 1895, how frequently were you at the Lathams’

A. Whenever I thought fit to go to see how they
were getting on and to give them such help as was
necessary preparatory to the proposed Griffo-Bar-
net boxing match, which we all thought would give
the best test of the capabilities of the machine in
question.

XQ137. What, if any use, was made of the Griffo-
473 Barnet film?

A. Mr. Latham and his sons hired a place on
Broadway and used one of the kinetoscope pro¬
jectors, inviting the public to witness the display.

XQ138. Were you there and saw it?

A. I was.

XQ139. The Griffo-Barnet film that you pro¬
duced yesterday is a positive taken at some later
time, from the negative which you took of the
Griffo-Barnet fight. Is that right?

A. Yes.

XQ140. How did you know how fast to turn
•474 the handle of the taking machine the night of the
swinging lamp experiment?

A. A piece of blank film was run through several
times and the speed of turning the handle was
judged in these preliminary tests, but in the tests
made with the incandescent lamp the machine was
turned by hand. The pictures taken of the Griffo-
Barnet fight were run differently; to the best of my
recollection, a small motor was attached to the
camera and storage batteries used to drive same.

Adjourned to Wednesday, April 12, 1911, 11

159

William K. L. Dickson.

New York, April 12, 1911, 11 a. m.

Met pursuant to adjournment.

Present — Counsel as before.

Cross-examination of MR. DICKSON con¬
tinued :

XQ141. What was the kinetoscope projector,
such as you referred to in XQ137?

A. Briefly to describe the kinetoscope projector,
in question 137, there was little or no difference 476
between the Edison kinetoscope and what they
were using, hence the name, with the exception
that the film was considerably wider, the slot in
the shutter enlarged as much as possible, so as to
retain some degree of sharpness while the film ran
continuously from one large spool above the gate
to the lower reel. This was the projector which I
had an opportunity of running or testing in their
Broadway exhibiting place.

XQ142. Was it a peep-hole machine?

A. No.

XQ143. That wasn’t the same machine that was 477
known as the eidoioscope, was it?

A. Yes.

XQ144. Did this machine project pictures on a
screen?

A. Yes.

XQ145. How large were the pictures?

A. I should judge, to the best of my recollection,
the pictures were projected 9 feet by 5, or a little
less.

XQ146. Was any use ever made of the swing¬
ing light film?

[PHOTOCOPY]

100

478 William K. L. Dickson.

A. None that I know of, unless it was kept as

XQ147. I asked yon in a previous question how
frequently after April 2nd, 1895, you were at the
Lathams’ shop, and you said, “Whenever! thought
fit to go.” Please give me a little more tangible
answer.

A. Being more or less undecided as to what I
intended to do, and wishing to probe into the pos¬
sibilities as described to me in such glowing col-
ors, I went as often as I could, to be exact, which,
I believe, is what you wish to know; might say,
to the best of my recollection once or twice a
week, and sometimes .daily at their 'exhibit on
Broadway.

XQ14S. Prior to April 2nd, 1895, and all dur¬
ing the time that you were visiting the Lathams’
shop and also visiting Lathams at the Hotel Bar¬
tholdi, where were you living?

A. As stated in my preamble, you will find I
mentioned lfiG Cleveland Street, Orange, New
Jersey.

XQ149. And it is your testimony that none of
480 the visits prior to the night of the swinging light
episode were made as matters of business, but
purely for social purposes?

K. No.- In my preamble I clearly stated that
it was principally social, but with the object of
trying to judge the best thing to do, to join them
or not, in the exhibition business.

XQ150. When was it that the subject of pho¬
tography as a matter of discussion between La¬
tham and yourself was no longer rigidly tabooed?

A. The leading questions naturally placed hy
Mr. Latham tended always in the direction of

161

William K. L. Dickson.

moving photography, the matter nearest his lieavt,
which to me being dangerous ground, by mutual'
consent was tabooed as much as possible. The
general principles relating to light waves, general
photography, as known to all and being common
property, were discussed, of course, at length j but,
as stated before, neither by word or action was
anything disclosed or discussed in relation to the
work I had in hand for Mr. Edison, nor did I wish
to know anything as to the minutiae or detailed
construction of what they were doing. It waif bet¬
ter so, until I had settled the momentous ques¬
tion of joining them or not.

XQ151. But my question asked when the sub¬
ject of photography as a matter of discussion be¬
tween you was no longer “rigidly tabooed”?

A. The one exception to this rule I touched on
some time back when we discussed a curious
movement that I had noticed in an old clock which
Mr. Latham jumped at and tried. This, however,
as stated before, might be put down as a slip.
The movement, of course, as stated at the time,
would be very slow.

XQ152. Question repeated.

A. I presume you mean when did I feel free to
discuss fully moving photography as known in
the art, with the exception always, of course, of
what was kept sacredly to myself, namely: the
work I had been engaged in for Mr. Edison, and
would say that this occurred naturally immediate-'
ly after the 2nd of April, 1895.

XQ153. You have spoken of the differences be¬
tween the film, of the Latham kinetoscope pro¬
jector and the Edison kinetoscope. Wasn’t there
an additional difference, namely: that the film of

the Latham device was transparent and that of
the Edison kinetoscope opaque?

A. No; that could hardly be so, as a negative
is never projected in both the Edison kinetoscope
and the so-called Latham projecting kinetoscope
positives or positive transparences were used.

XQ134. In the Edison kinetoscope the observer
iooked directly upon the positive with a light on
the other side of the positive, and the film was suf¬
ficiently opaque to prevent the light blinding or
confusing the eye of the observer. Is that cor¬
rect?

A. Not exactly. In the kinetoscope Viewing
Machine a small i or 5 candle power lamp was
used, behind which a parabolic mirror was placed,
the rays crossing at a point through a narrow slot
in shutter, above which an endless band of posi¬
tive pictures ran continuously. These pictures
were enlarged 2 y2 diameters by a magnifying glass
and the result appearing in a similar manner as
an ordinary transparency held up to the light. In
the Latham projecting kinetoscope a more power¬
ful light was used in the form of an arc lamp of
nearly 3,000 candle power, and concentrated
through a short focus condenser on to the picture
or transparent positive film, thence through a pro¬
jecting lens to the screen.

XQ155.- Then it is your testimony that the Edi¬
son kinetoscope employed a substantially perfectly
transparent film?

A. Yes.

XQ15G. All through its commercial history?

A. Yes.

XQ157. What was the construction of the
“curious stopping device for actuating a clock¬

work” which you described to Latham, and which
he thought would be useful for the work on which'
he was then engaged?

A. It might be briefly described as a U-shaped
pair of plungers, the ends cut off at right angles
coming to a point. These plungers coming against
a peg, pushed the peg downwards by a sliding ac¬
tion due to the angle of the plunger. One arm of
the U-shaped plunger passing beyond the peg or
series of pegs placed at equal distances locked the
pegs in position, the second arm of the U-shaped
plunger engaging the next peg as the other was 488
released. I think, perhaps a rough sketch may
be of some assistance, as I find it rather difficult
to describe from memory. The fact is, this move¬
ment is too well known and can be found, I think,
in any text book on clock mechanism.

XQ158. When you described this mechanism to
Latham, were you describing a mechanism which
was in principle that of one of the feeding mech¬
anisms that had been tried for cameras in Edi¬
son’s laboratory?

A. No, decidedly not.

XQ159. None of the Edison cameras that had 4S9
been tried had employed a feeding mechanism in
which a reciprocating member having a surface in¬
clined to the direction of its reciprocation had
caused intermittent movement of the film by en¬
gaging something connected with the film by the
inclined surface?

Mr. Page: Objected to as irrelevant and
immaterial, and as an inquiry into matters
in no way pertinent to the issues of the
, present case.

A. None whatever; in fact, it was entirely un¬
fitted for any other purpose but for what it was
intended, namely: the slow clock-escapement move¬
ment.

XQ1G0. At the time that yon described this de¬
vice to Latham yon knew that he. had in mind the
making of cameras or projectors with intermittent
moving films, did yon not?

A. Yes; he so intimated he was going to or was,
I forget which.

XQ1G1. Where were you when this interview
took place?

A. To the best of my knowledge at the Hotel
Bartholdi.

XQ1G2. At that time you were familiar with
the work thus far done at Edison’s laboratory,
with cameras having an intermittently moved film,
were you not?

Objected to as irrelevant and immaterial.

A. Yes.

XQ1G3. And by that time had such cameras
been used for the commercial work of taking pic-
" tures for the Edison kinetoscope?

Same objection.

XQ1G4. What was the construction of the feed¬
ing mechanism in the camera used in this com¬
mercial work?

Same objection.

A. Briefly, a horizontal continuously traveling
disk containing one slot adjacent to a vertical

[PHOTOCOPY]

1G5

_ William E. L. Dickson. _ 4g3

three-toothed disk, one of the teeth resting on the
first mentioned horizontal rotating disk slipped
through said mentioned slot, giving an impulse to
further mechanism controlling the film on a
sprocket wheel. The three-toothed vertical disk
was kept in tension in a forward direction while
resting one of the teeth on the first mentioned
horizontal slotted disk.

XQ1G5. Did the intermittently acting mech¬
anism pull directly upon the film on the supply
reel without any intermediate devices engaging the
film? 494

A. Yes.

XQXGG. This feeding mechanism that you have
described was the only one used in cameras for
taking pictures for the Edison kinetoscope prior
to your leaving Edison, was it? <

A. Yes.

XQ1G7. Do you recall making some experiments
with Otway Latham at Columbia College?

A. Yes.

XQ1G8. Those experiments were made, well,
before the end of 1894, were they not?

A. Yes. 495

NQ1G9. What were those experiments?

A. As stated before, the experiment I wished to
try was to see if with a powerful arc lamp the
kinetoscope could be used for projecting or not,
and if so, then X could approach Mr. Edison for
the rights of exhibition by projection in accordance
with my agreement letter with Mr. Woodville La¬
tham to the effect that I would use my best en¬
deavors to persuade Mr. Edison to give us the
right of using his film. We found the experiment,
which was made openly, at Columbia College, (that
being my preference) to be sufficiently encour-

— V-~

[PHOTOCOPY]

aging for mo to keep my agreement. The experi¬
ment simply consisted in running an old trans¬
parent film through an Edison kinetoscope in the
form of a short endless band, the shutter hole be¬
ing slightly enlarged so that we could get more
light through. The picture projected was about
o feet square. This was done in the presence of
some of the Columbia College professors; Mr. Wood-
ville Latham or Mr. Otway Latham, I forget which
was present.

XQ170. Do you recall making a sketch or
497 sketches of the stop mechanism or intermittent
feeding mechanism for the Lathams?

A. No, I hare no recollection and in fact, I can
certify most positively that no such sketches were
ever made by me at any time prior to my leaving
Mr. Edison, unless perhaps I sketched out the clock
stop motion already discussed.

XQ171. Can you say positively whether you did
or did not sketch out such mechanism and leave
the sketch with one of the Lathams or Mr. Lauste?

A. To the best of my recollection, I think it is
quite likely that I did„as Mr. Woodville Latham
was very anxious to try this device.

XQ172. You did know at the time, then, that
Mr. Latham wanted to try this stop mechanism
you suggested, in connection wth his development
of moving picture machines?

A. Yes, for he stated as much, that he wished to
try it.

XQ173. Had Mr. Latham, prior to the first of
November, 1894, repeatedly shown you drawings of
a machine for projecting pictures, having intemit-
tent movement of the film?

A. No.

167

William K. L, Diclcso n.

A. To the best of my recollection, he stated that
he had many sketches and derices but I positively
refused to inspect same for obvious reasons.

XQ175. Was the Columbia College experiment
one that lasted more than a single day?

A. It lasted for an hour or an hour and a half,
possibly two hours, as we could not take up the
time of the professors and attendants. It was
only on one day.

XQ176. Do you know of any experiments made
by Woodville Latham in October or September,

1894, in which part of the apparatus employed 500
was furnished by you from the Laboratory of Mr.
Edison?

A. None whatever, with the exception of the Co¬
lumbia College test which I made.

Beoess.

XQ177. Mr. Lauste came to this country to give '
his testimony in this case at the same time that
you did, did he not?

A. Yes.

XQ178. Was it you who arranged with him over
there about coming? 501

A. No.

XQ179. When did you last see him on the other
side?

A. At his house a week before leaving.

XQ180. And when last before that?

A. About a year and a half before.

XQ181. You came over on the same steamer?

A. Yes.

XQ182. You both knew that you were coming
over to give testimony with reference to the work
in Latham’s shop?

[PHOTOCOPY]

XQ183. And am I to understand that tlie ar¬
rangements for Lauste coming over here had all
been made entirely independently of you?

A. Yes.

XQ184. You do not fix the date of February
26, 1895, except by what yon have read in a printed
copy of Latham’s previous testimony, do you?

A. No.

XQ1S5. Did you ever write a letter to Lauste
asking him whether he remembered that yon were

603 the one who had suggested the loop in the film of
the Latham camera?

A. No, I hare no such recollection.

XQ18G. Can you say positively that yon never
wrote such a letter to him?

A. I can.

XQ1S7. Or any other, asking him whether he
remembered your invention of any part of the
Latham camera — or something to that general ef¬
fect?

A. I have no recollection whatever of writing
any letter on this subject.

XQ1SS. In Complainant’s Exhibit, Lauste Depo-

604 sition, I find the following: “XQ13G. Well, did
Mr. Dickson speak to you about it? A. No; he
wrote to me some time ago, and asked me if I re¬
member that he is the inventor of the loop, and I
said no, because I made the machine before he
came.” Can you say positively that there is no
basis for this statement?

A. None whatever, I have no recollection of
writing any such letter. I remember calling him
up on the ’phone prior to going to his house and
telling him that there was a case coming on which
1 learned from Mr. Koopman, also over ’phone.

169

William K. L. Dickson.

. that we might have to go out to America to testify
as to the Latham inventions, and there was a
question of a loop to bo testified on. '

XQ189. That was just shortly before you started
to this country, the end of last month?

A. Yes.

XQ190. Had Lauste already heard of it, did he
say?

A. Yes.

XQ191. In your conversations with Lauste, be¬
ginning on that day over the telephone, and up to
the time that he gave his testimony, -what was said
between you as to who had suggested the loop?

A. Mr. Lauste, in his cabin on board the “Bal¬
tic” talked on various things in connection with
his old work and also touched on the loop, knowing
as he did that that feature of the work seemed
to be of importance and explained how he had first
thought of it by seeing a loop in a certain book
at some time or other, catalogue, I believe he said,
of machinery, and that when they were experiment¬
ing Mr. Latham was very desirous of preventing
the film from tearing and so this loop was added
and a general talk of this kind. I wasn’t particu¬
larly interested in all this. It was my part of the
programme to remember what I did, what I saw
and so on.

XQ192. The testimony, or the extract from testi¬
mony given by Lauste, which I read to you, was
given in 1898, 13 years ago. Having this in mind,
does it aid to refresh your recollection and modify
it in any way after your having written such a
letter?

A. No, I can only state what I remember and
what I see and say to the best of my knowledge

505

607

[PHOTOCOPY]

508 _ "William K, L, Dickson.

that I have no recollection whatever of writing
sudi n letter.

XQ193. Was the feature of a loop between the
exposure window and the supply roll a new one
to you when yon saw it at the swinging light
episode?

A. Yes.

XQ19J. Is it true that yon told Mr. Laustc before
T.austc had met Latham that you had a good situa¬
tion for him in connection with a machine for
projecting pictures and did you then give him a

509 letter of introduction to Mr. Latham?

A. Part right, part wrong. I gave Mr. Lauste
a letter of introduction to Mr. Woodville Latham,
not knowing or having the slightest clue that Mr.
Latham was going into competition which on the
face of it would have been to jeopardize my own in¬
terests. It was after I had given this introduction
that Mr. Woodville Latham, in an interview, said
that he had some good ideas in moving photography
which he wished carried out. No mention was
made in my letter of introduction as can plainly
be seen, in regard to what class of work Mr. La-

510 tlmm wanted Mr. Lauste. to do.

XQ195. At the time you gave the letter to Lauste,
did you know that the younger Lathams were
engaged in business in connection with the employ¬
ment of Edison kinetoscopes?

A. I knew the young Lathams had six or more
machines on exhibition somewhere in New York
and if I remember correctly, I simply inferred that
they wished a good mechanic to look after and
keep their machines in running order.

XQ190. Do you recall anything as to what the
hook was that you were using in the Edison Lab-

171

William K. L. D iclson.

oratory and that Laustc referred to as being one
that contained a showing of this loop?

A. I am afraid I cannot help you as I do not
remember the book.

XQ197. Do you recall whether Lauste ever came
to you while you were still with Edison to get what
ideas you had for these moving picture machines?

A. I do.

XQ19S. State the circumstances, please.

A. Mr. Lauste came over from New York unso¬
licited by me and told me he was instructed by
Mr. Woodville Latham to see if I would help them 512
in regard to some difficulty or something or other,
presumably a stop motion of some kind. I re¬
member distinctly and wish it quite clearly under¬
stood that in keeping with all I did at the time, I
pointed out to Mr. Lauste that I could give him no
assistance whatever in the art until I had made
up my mind to join forces with them.

XQ199. Do you remember whether before the
time of the swinging light pictures you many times
told Lauste that you didn’t like coming to the
shop because it was compromising to you and that
when you would leave Edison it would be all right, pjg
that yon would come every day but until then you
could not do it?

A. Quite right. I remember every word of it.

XQ200. How long was that before the day when
you told Mr. Edison that he would have to choose
between Gilmore and yourself and upon his refus¬
ing to discharge Gilmore, the handing in of yonr
resignation?

A. I haven’t the remotest idea. What I said to
Lnuste did occur ns stnted, but when it occurred,

I do not remember.

XQ201. Did the film pass upward or downward

[PHOTOCOPY]

anything about wlmt has

in the machine that took the swinging light photo¬
graphs?

A. Downward.

XQ202. Did yon know E. W. Kleinert?

A. Yes, I saw a man by that name at the Latham
shop.

XQ203. Do yon know anything about what has
become of him?

A. Xo.

XQ204. Did you take a picture or help to take a
picture with the same camera on the roof of the
Scott building after the swinging light episode and
before the picture of the Griffo-Barnet fight?

A. Xo.

XQ205. Do you recollect a conference in Xew
York between Otway Latham, yourself, your wife,
Mr. Edmond Cougar Brown and Mr. John Murray
Mitchell?

A. I do.

XQ20G. State the time when this conference oc¬
curred and also state what occurred at the con¬
ference.

A. I have no recollection of the date of confer-
1 ence but I remember it was in regard to the same
old thing, to join or not to join and also in relation
to, that if I would join them, I should have a cer¬
tain amount of stock allotted to me. I think that
was the purpose of the conference in question, but
as for the stock, this stock was never transferred
to me nor have I to. this day seen a share certificate
and it was only the other day that Mr. Lauste
handed me for my inspection a share certificate un-
der the heading of the Lamda Company.

XQ207. Wasn’t it at this conference thnt it was
agreed among all of you that a quarter of the
stock of the Lamda Company be assigned to Mr.

Brown because you did not wish to make a contract
in your name and so place yourself that the pro¬
priety of your actions might be questioned?

A. Xo. The stock at Mr. Edmond Congar
Brown’s suggestion, should be put in his name, for
the sole reason that he wished to safeguard my in¬
terests in case I should join them, the business
proving satisfactory. X know very little more
about this, but I have no doubt Mr. Edmond Con-
gar Brown could give you all the information you
require.

XQ20S. You gave Mr. Brown a power of attorney 5XS
to act for you in these matters, did you not?

A. I do not remember giving Mr. Brown a power
of attorney. Mr. Brown was my legal adviser in
many other matters and did this, if I remember
right, as a friend.

XQ209. What was the object of having legal ad¬
visers for both sides present at this conference,
if its only purpose was to discuss the advisability
of your making a connection with Latham?

A. I give it up, presumably, however, to come to
some definite understanding that if I did leave, I
should be provided for.

XQ210. I understand that before the supplemen- 519
tary roller on the upper sprocket wheel which you
suggested was added, the film came straight down.

Is this supplementary roller shown on the sketch
Lauste made in this case?

A. Yes.

XQ211. It is the uppermost roller of the sketch,
is it?

A. Yes.

XQ2I2. And before this, the film was only en¬
gaged by one. tooth on the upper sprocket, is that

A. One or two teeth.

XQ213. Ami that put too much strain on these
perforates and frequently resulted in tearing the

A I remember running through a long piece o

jmffiTt •” f6"' dnys i,1'ior tlle GHffo-Bar-
net fight and i seemed to run very satisfactorily
untd there would be a little slack. When this wm
taken up a slight jerk would take place and or
examination, I noticed a roughness in one or twe
of the perforations. This, however, did not depre-
mate in any way that I could see, the results.
I, however, thought it advisable when trying this

urthei along towards the upper center of the
sprocket wheel to place at this particular point a

not?// b? °1' S°IUe otIler soft material, I do
not ust remember which, grooved out on the sides
to allow the spocket teeth to enter. The result

as i nfl 'r "T SiWply t0 atM “ fc* more teeth
as an additional precaution against any possible
danger of roughness on the edge of the fiL per

ZrTu A/?! know^if this was absolutely es-
sential but it had its use.

XQ214. What do you know ns to Latham’s fi-
tbe period —

"as a matter X had nothing to do with

XQ215. The discnssions° betweeT you relative
to your joining the Lathams, did not brin- out
any expectations on Latham’s part that you would
financially contribute to the enterprise, did Thev’

175

- K. L. Dickson,

XQ21C. Did you and Latham ever discuss -not
outing the camera which you saw?
t'Z°’ not t0 ffly recollection.

XQ-17. Is there any other error that you can

U took the swinging light picture pres

n U1 G deffad<,itral 101161 that yoa

«nd the different path of the film produced there-
ont'thfnVlklC?lirn(3ed T l0°ks aI1 ri^t. The

the7upp?rSor arn?eN er/b°Ut “ iS iUsi ™

XQ218. What do the letters K. M. 0 D in tha
name of your syndicate indicate’ ' ' “

man ? < 1 * E. B. Koop-

L. DicSon ’ Heman Casler and W. K.

v*Xr 2?' At the time °f the testimony in Latham
fact ^

m a general way, the character of “ d

involved therein9 * lnvention

in Orange? ' °f y°W Wife at house'

A- ^hnt I should that day leave Mr. Edison and

[PHOTOCOPY]

_ William K. L, Dickson. _

work with them in developing a taking machine on
the lines of the Edison so-called kinetograph, not
that I really think tlint Mr. Woodville Latham, to
do him justice, wished me to divulge anything I had
been doing for Mr. Edison but wished to have an
apparatus under their control that they could make
films for exhibition purposes. It was modified, of
course, to what I have already stated, and in fact,
it was tlie only thing to be done, namely, to get
Mr. Edison to supply these films for this particu¬
lar exhibition purposes.

XQ221. Please state all that yon can remember
that was contained in the letter which you received,
and as a result of which yon visited the shop and
photographed tlie swinging light?

A. I cannot bind myself to the exact wording
but the sense of the letter was to the effect that I
should come at once, as they believed they had
something fine and I must see it. It was a jubilant
epistle and so I went.

XQ222. Didn’t the letter mention that it was a
camera they wanted to show you?

A. I do not think so. I do not think there was
any description. I naturally knew or inferred that
it was the camera; as stated before I was aware
that they were working on such a device, although
I had never seen it in detail. In fact, I purposely
kept away at one of the visits from looking at the
construction. Upon that evening, however, the
the whole thing was explained and shown me.

XQ223. Didn’t you go over expecting to be shown
a camera?

A. Naturally. The purport of the letter indi¬
cated that they wished to show me something fine
or good, whatever the words were.

Adjourned to Friday, April 14, 1911, 10.30
A. M.

_ _ William K. L. Dickson. _ ^

New York, April 14, 1911,

10.30 A. M.

Met pursuant to adjournment.

Present: Counsel as before.

Cross-examination of MR. DICKSON continued :

XQ224. Did you ask the Lathams or any of them
to choose the location for a shop as near as prac¬
ticable to the ferry connecting with the trains for
Orange or something to that effect? 530

A. No, decidedly not. This was proposed to me
by Mr. Woodville Latham as being more convenient
for me to come over and see their work and help
them. This, of course, is another of those garbled
and vindictive statements made in the testimony of
that gentleman and which I am here to confute
whenever I can.

XQ225. Before the night of the swinging light,
did you see any efforts made to project pictures
with a machine of the same general character as
the machine used to take the pictures of the swing¬
ing light or with that same machine at the Frank¬
fort Street shop? 631

A. No.

XQ22G. Did you supply any film for that pur¬
pose or for any purpose in January or February
1896, to the Lathams or anyone connected with
them?

A. No, decidedly not.

XQ227. Did you find Otway Latham and Gray
Latham or either of them skilled as mechanics?

A. No, but Mr. Otway appeared to be very
handy. .

XQ228. When yon visited the Latham shop be-

—4 -

[PHOTOCOPY]

ITS

532 _ 'William K. L, Dickson.

fore the night of the swinging light pictures, was it
quite a frequent occurrence that Mr. Woodville
Latham would not be there?

A. As I -went purely and alone on Mr. Wood¬
ville Latham’s invitation, with possibly occasional
invitations from Otway Latham, I would find the
invitors always there, except on the night of the
lamp test when Mr. Woodville Latham was ill or
indisposed. • ’

XQ229. At the time of these various visits, do
you know whether Mr. Otway Latham knew you
were working with Mr. Edison upon photographic
•machines? *

A. Decidedly, since he and his people bought
kmetoscopes which they had on exhibition some;
where in the city.

XQ230. On April 2nd, 1895, did you consider
•Latham obligated to you in any way?

A. No, not in any way.

XQ231. How about any earlier period than
that?

A. The same answer applies as naturally X could
not charge them for erecting the Edison kineto-
634 scopes at their exhibit as X was paid to do this bv
Edison. J

XQ232. Did you meet Gray Latham and Otway
Latham or either of them at any time at the Labor¬
atory of Mr. Edison?

A. Yes, in the early part of 1894, they came to
Mr. Edison’s Laboratory to purchase some kineto-
scopes for exhibition purposes. It was then that
I met them for the first time and possibly three
times after that during this deal.

XQ233. Did you ever tell either Gray Latham or
Otway Latham at Edison’s Laboratory that you

were the real inventor of the kinetoscopo,
suggested the idea to Edison?

A. To the best of my recollection, I hardly
even if I had been the inventor, so-called. w*VI i'
have been policy to have made such a statement to
utter strangers. I am confident, however, that this
is another spiteful dab.

XQ234. Are you positive in your recollection that
there is no basis whatever for any such statement
as this?

A. I can state emphatically that I haw not the
slightest recollection of any such conversation.

XQ235. Gan you swear positively that you did
not make any statement of this character to either
of the Lathams at the Edison Laboratory?

Mr. Page: Objected to as irrelevant and
immaterial, as, if the witness is testify'11?
to the best of his recollection, it is
immaterial how he answers this question.

A. As stated before, I have no recollection of
making such a statement, and I am inclined to
believe, to the best of my knowledge, the conversa¬
tion did not take place or was turned and twisted 637
for a purpose.

XQ23G. You do recollect, however, do you not,
that at the Edison Laboratory, you did express to
one of the Lathams your displeasure at not having
received the credit due you for the work in moving
picture lines you had done with Edison?

A. This question is in keeping with the Iasi and
tends to show that there was some hidden object it'
making these various statements. I again, will
most emphatically state that I have no recollection
of such conversations especially with men that X
kne.w nothing about.

[PHOTOCOPY]

Dickson.

XQ237. Do .you remember whether or not in
your conversation with Gray or Otway Latham at
the Edison Laboratory you suggested or intimated
that an association with them in the kinetoscope
business would be more pleasing to you than as¬
sociation with Edison?

A. I think on the face of it, this would he utterly
absurd, considering the number of years I had been
so delightfully associated with Mr. Edison and
that my work was so highly congenial to me in
every respect. I was head of the electrical mining
639 department ns well as the head of the kinetoscopie
and kinetograpliic moving picture department and
tin's should he answer enough to show the ridicu¬
lous and I again use the word, vindictive nature of
the series of statements.

XQ238. Do you remember that Otway Latham
and Gray Latham asked you if you would he will¬
ing to join with them in their work and that after
some hesitation you agreed that you would talk the
matter over with your wife and give a definite an¬
swer at a later time?

A. Quite right. This, however, has been ex-
540 plained in previous answers and questions.

XQ239. Did you see any JS94 or 1895 drawings
made by Lauste for cameras or projecting machines
or parts thereof?

A. I saw several sketches lying around on table
and bench, hut was particularly careful not to in¬
spect same, for obvious reasons.

XQ240. The reasons may be “obvious,” but in
all this deposition, I have been unable to find any¬
thing that explains why your reasons for not ex¬
amining these drawings and apparatus in process
of construction did not equally apply to prevent
you when you received a letter from Otway Latham

181

_ 'William K. L, Dickson. _

from which you understood that a moving picture
camera had been completed, ready .for your in¬
spection, from visiting the shop and obtaining the
exact information as to that camera. Do you de¬
sire to explain any further?

Counsel for complainant suggests that this
may be due to a lack of perception on the
part of Defendant’s' Counsel and not such
an inference as others might draw from the
testimony and therefore objects to all but
the interrogative portion of the question as
irrelevant and immaterial.

A. The matter is as simple as A B C, and I have
endeavored throughout this testimony to various
answers and questions to show that I was particu¬
larly careful as long as I was not associated with
the Lathams, as a matter of honor, to probe and
unduly examine into their work. The same thing
applied to the fact that I was scrupulously careful
not to divulge anything that was going on at Mr.
Edison’s laboratory and it was not until I was in¬
vited to see the completed camera' on the' night' of
the swinging lamp test that I commenced to see 543
the possibility of joining the Lathams'which even
then was most uncertain. Although this machine
was thoroughly explained and'examined by me, I
felt that even if I did not join I could, of course,
not take any advantage of what I had seen; In
conclusion, would add, as stated before, that this,
was forced on me.

XQ241. In your answer to XQ1C4 you described
the feeding mechanism of the camera used in the
commercial work for producing pictures for the
Edison kinetoscope. Was the horizontal continu-

[PHOTOCOPY]

182

644 _ William IC. L. Dickson.

ous travelling disc yon speak of arranged like the
disc 25 of tlie Edison Patent 12,037, except tlmt it
had one slot instead of six and was the vertical
three toothed disc arranged like the disc 23 of
that patent with relation thereto except that it had
three teeth instead of six?

Mr. Page: Ojected to as irrelevant and
immaterial and as fishing for informa¬
tion, no way pertinent to the questions in¬
volved in this case.

545

A. My explanation or description as given in my
answer 164 is purely from memory, some 22 years
ago, was broadly a description of the action of such
a machine. What I described doubtless was suf¬
ficiently correct for the purpose and perhaps one
of the modifications we made at that time. The
patent drawing entitled “T. A. Edison Kinetoscope
No. 12,037” shows such a modification and looks
quite correct; showing more teeth on the vertical
disc with a corresponding additional number of
slots, in the traveling horizontal disc. The terms

546 horizontal and verti<Sal do not as closely apply to
this drawing as in my rough description from mem¬
ory, although the action is the same.

XQ242. How long a film was used in the Edison
kinetoscope?

A. In the first models, there was about between
25 and 30 feet and later 48 feet.

XQ243. 48 feet was the longest length of film
used on the commercial kinetoscope?

A. Yes.

XQ244. And was the same length or a lesser
length used on the camera when taking pictures
for the kinetoscope?

183

_ _ William K. L, Dickson. ^

Mr. Page: The objection heretofore made
to Counsel for Defendant using this case
as a fishing excursion for information in no
way necessary or relevant to the issues is
objected to as a gross abuse of the privil¬
eges of cross-examination.

A. It depended somewhat on the subject and on
some occasions two 24 foot lengths were used on
several' subjects and sometimes three subjects pho¬
tographed and joined together to make up the re¬
quired length averaging about 48 feet on the last 548
models, or when the occasion required, a complete
48 length was used in the taking camera developed,
printed, and the positive placed in the kinetoscope
in the form of an endless band.

XQ245. How did the thickness of the film used
in the kinetoscope compare with the thickness of
the film used in kinetoscope projectors, — if you
can, state the thickness of each.

Mr. Page: Same objection.

A. I am afraid this is rather too much of a task.

My distinct remembrance, however, is that the film 549
used in the camera was extremely thin, almost like
paper but very tough. The positive, if I remem¬
ber well, was somewhat thicker as used in the
Edison kinetoscope. I had the pleasure of hand¬
ing in a sample of the Griffo-Barnet positive film
used by the Lathams in their projecting machine
and I think that both the slow emulsion positive
films used in the Edison kinetoscope and in the
so-called Latham kinetoscope projector, were very
much alike as to thickness.

. XQ246. . And as I understand you, the film used

[PHOTOCOPY]

184

' 550 _ William K. L. Dickson, _

in tlie camera was much thinner, that is, the Edison
camera. Is that right?

A. Somewhat thinner, yes.

XQ247. Two thousandths of an inch thick or
thinner?

A. I give it up, too difficult to remember such
exact measurements after so many years. For that
reason I made my answer comparative.

XQ248. How did the color of the film used in
the Latham camera compare with that of Edison
camera?

B5) A. In your question, I presume yon mean the
unexposed film. Nearly all film used from that
time to the present' has a creamy delicately tinted
greenish appearance.

XQ249. Has all the unexposed film from the be¬
ginning been of that color, do you know?

Cross-examination Closed.

Re-direct Examination by Hr. Page:

RDQ250. Have you any pecuniary interest in the
outcome of this suit? v
553 A. None whatever.

Re-cross Examination by Mr. Eyre:

RXQ251. Do you hold stock in the K. M. C. D.
Syndicate?

A. I do not think it can be called holding.stock.

I have an interest or had an interest in this K.
M. C. D. Syndicate, but having disposed of niy hold¬
ings. in all the subsidiary companies, including the
American Biograph & Mutoscope Company, my in¬
terest therefore in the K. M. C. D. wduld naturally
come to an end.

185

William E. L. Dickson.

- - - - - 553

RXQ252. Is the K. M. C. D. Syndicate an incor¬
porated company?

A. No, it is still an agreement of partnership.
RXQ253. Do you mean that your present in¬
terest in the K. M. C. D. Syndicate is one of no
.value whatever?

A. Yes, unfortunately.

RXQ254. The K. M. C. D. Syndicate owns
nothing of any kind, is that it?

A. For many years past, I have received nothing
from the K. M. C. D. and with the exception of the
K. M. C. D. Syndicate holding one or two side 554
lines, which in fact do not know exactly what they
are, anyway, nothing seems to have come of the
side lines, I later, as stated before, sold out my
shares in any company or companies which should
have paid interest in a certain proportion to this
quarter partnership, hence my explanation that
if I held no shares, there could be no division of
interest as far as I was concerned.

RXQ255. How recently did you sell out?

A. About three years ago or maybe more, I sold
out my last holding, namely, the American Muto-
Jscope & Biograph Company shares.

RXQ256. What arrangements were made with 555
jyou as to coming over here to give this testimony?

A. A fee of £300, out of which I should pay my
own expenses.

Deposition Closed.

W. K. L. DICKSON.

Legal Department Records
Motion Pictures - Case Files

Motion Picture Patents Company v.

Universal Film Manufacturing Company et al.

Jesse Isidor Straus et al. v. Victor Talking Machine Company

This folder contains two U.S. Supreme Court opinions of April 9, 1917.
The first pertains to the suit brought by the Motion Picture Patents Co. against
the Universal Film Manufacturing Co. and other defendants for infringement
of Woodville Latham's U.S. Patent 707,934. The second relates to the suit
brought by Jesse Isidor Straus and other plaintiffs against the Victor Talking
Machine Co. Both opinions became legal precedents, barring the license
agreements used by the Motion Picture Patents Co. and Thomas A. Edison,
Inc., to fix prices and otherwise limit the use or sale of their products. Both
opinions contain marginal notations, some probably by Edison.

SUPREME COURT OP THE UNITED STATES.

No. 715.— October Term, 1916.

Motion Picture Patents Company,]

Petitioner, Certiorari to the United States

vs. Circuit Court of Appeals for

Universal Film Manufacturing the Second Circuit. ■

- Company, et al. J

[April 9, 1917.]

Mr. Justice Clarke delivered the opinion of the Court. .

In this suit relief is sought against three defendant corpora¬
tions as joint infringers of claim number seven of United States'
letters patent No. 707,934 granted to IVoodville Latham, assignor, \
on August 26, 1902, for improvements in Projeeting-Kinetoscopes.''
It is sufficient description of the patent to say that it covers a
part of the mechanism used iri motion picture exhibiting machines
for feeding a film through the machine with a regular, uniform
and accurafe movement and so as not to expose the film toexcessive
strain or wear. ' \

The defendants in a joint answer do not dispute' the title of
the plaintiff to the patent but they deny the validity of it, deny*,;
infringement, and claim an implied license to use the patentee!
machine.

Evidence which is undisputed shows that the plaintiff on June
20] 1912, in a paper styled “License Agreement” granted to The
Precision Machine Company a right and license to manufacture and
sell machines embodying the inventions described and claimed in
the patent in suit, and in other patents, throughout the United
States, its territories and possessions. This agreement contains a
covenant on the part of the grantee that every machine sold by it,
except those for export, shall bo sold “under the restriction and
condition that such exhibiting or projecting machine shall'be used

2 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.

of the licensor while it owns said patents and upon other terms to
be fixed by tlie licensor and complied with by the user while the
said machine is in use and while the licensor owns said patents
(which other terms shall only be the payment of a royalty or
rental to the licensor while in use).”

The grantee further covenants and agrees that to each machine
sold by it, except for export, it will attach a plate showing plainly
not only the dates of the letters patent under which the machine
is “licensed,” but also the following words and figures:

“Serial No _

“Patented No.

“The sale and purchase of this machine gives only the right to
use it solely with moving pictures containing the invention of re¬
issued patent No. 12192, leased by a licensee of the Motion Picture
Patents Company, the owner of the above patents and reissued
patent, while .it owns, said patents, . and upon other terms to be
fixed by the Motion Picture Patents Company and complied with
by tl)e user while it is in use and while the Motion Picture Patents
pompany owns said patents. ..The removal or defacement of this
plate terminates tlie right to use this machine.”

1'ho agreement further provides that the grantee siiali hot sell
any machine at less than the plaintiff’s list price, except to jobbers
and others, for purposes of resale and that it will require such
jobbers and others to sell at not less, than plaintiff’s list price. The
price fixed in the license contract for sale of machines after May
1st, 19109, is not less than $150 for each machine and tiio licensee
agrees to pay a royalty of $5 on some machines and a percentage of
the selling price on others.

it is, admitted that the, machine, the use of which is charged to
be ah infringement of tlie patent in suit, was manufactured by
The, Precision Machine Company and was sold and.delivered under
its “License Agreement” to the Seventy-second Street Amusement
bompany, then operating a playhouse on . Seventy-second Street,
in New. York, and that when sold it was fully paid for and had
attached toft a plate with the inscription which we have quoted as
required by the agreement. t.

Reissued patent 12,192, referred io in the, notice, attaehed.to the
machine, .expired on August ,31,, i9X4. , The defendant Prague
Amusement Company on November 2, 1914, leased the Soventy-
seebhd Street playhouse f rom, tlie Seventy-second Street Amusement
Company, and acquired the alleged infringing machine as a part

Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al. 3

of the equipment of the leased playhouse. Subsequent to the
expiration of reissued patent 12,192 the defendant, Universal Film
Manufacturing Company made two films or reels, which, between
March 4th and 17th, 1915, were sold to the defendant the Universal
Film Exchange and on March 17, 1915, were supplied to the
defendant Prague Amusement Company for use on the machine,
acquired as we have stated, and were used upon it at the Seventy-
second Street playhouse on March 18th, 1915.

On January 18, 1915, the plaintiff sent a letter to the Seventy-
second Street Amusement Company, notifying it in general terms
that it was using without a license a machine embodying the inven¬
tion of patent No. .707,934 and warning it that such use constituted
an infringement of the patent, and on the same day the plaintiff
addressed a letter to the defendant Universal Film Exchange
notifying it that it also was infringing the same patents by supply!
ing films for use upon the machine of the Seventy-Second Street
playhouse and elsewhere. The bill in this case was filed on March
18,1915.

The District Court held that the limitation on the use of the
machine attempted to be made by the notice attached to it, after
it had been sold and paid for, was invalid, and that the Seventy-
second Street Amusement Company, the purchaser, and its lessee,
the Prague Amusement Company, had an implied license to use the
machine as it had been used, and it dismissed the bill without
passing on the question raised in the pleadings ns to the validity
of the patent. The Circuit. Court of Appeals affirmed the District
Court (235 Fed. 398) and the ease is here for review on certiorari.

It was admitted at the bar that 40,000 of the plaintiff’s mnehines
are now in use in this country and that the mechanism covered by
the patent in suit is the only one with which motion picture films
can be used successfully.

This state of facts presents two questions for decision :

First: May a patentee or his assignee license another to manu¬
facture and sell a patented machine and by a mere notice attached
to it limit its use by the purchaser or by the purchasSPIT lessee, to
films which are no part of the patented machine, and which are
not patented?

Second. May the assignee of a patent, which has licensed another
to make and sell the machine covered by it, by a mere notice at¬
tached to such machine, limit the use of it by the purchaser or by

laucr v. O Donnell,
not to bo doubtful
they really do not

10 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.
vention described in tlie claims of the patent and that it is not com¬
petent for the owner of a patent by notice attached to its machine
to, in effect, extend the scope of its patent monopoly by restricting
the use of it to materials necessary in its operation but which arc no
part of the patented invention, or to send its machines forth into the
channels of trade of the country subject to conditions as to use or
royalty to be paid to be imposed thereafter at the discretion of such

12 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.

conclusions we have stated in this opinion, is plainly void, because
wholly without tlio scope and purpose of our patent laws and be¬
cause, if sustained, it would be gravely injurious to that public
interest, which we have seen is more a favorite of the law than is
the promotion of private fortunes.

Both questions as stated must bo answered in the negative and
tho decree of the Circuit Court of Appeals is
, Affirmed.

Mr. Justice McReynolds concurs in tho result.

SUPREME COURT OE THE UNITED STATES.

No. 715.— October Term, 1916.

Motion Picture Patents Company, 1 On Writ of Certiorari to
vs. I the United States Cir-

Universal Film Manufacturing Co., [ euit Court of Appeals
et al. J for tho Second Circuit.

[April 9, 1917.]

Mr. Justice Holmes, dissenting.

I suppose that a patentee has no less property in his patented
machine than any other owner, and that in addition to keeping
the machine to himself tho patent gives him the further right to
forbid tho rest of the world from making others like it. In short,
for whatever motive, lie may keep his device wholly out of use.
Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S.
405, 422. So much being undisputed, I cannot understand why he
may not keep it out of use unless the licensee, or, for the matter of
that, the buyer, will use some unpatented thing in connection with
it. Generally speaking the measure of a condition is the conse¬
quence of a breach, and if that consequence is one that tho owner
may impose unconditionally, ho may impose it conditionally upon
a certain event. Ashley v. By an, 153 U. S. 436, 443. Lloyd V.
Dollison, 194 U. S. 445, 449. Non debet, cui plus licet, quod minus
est non liccre. D. 50, 17, 21.

No doubt this principle might be limited or excluded in cases
where the condition tends to bring about a state of things that
there is a predominant public interest to prevent. But there is no
predominant public interest to prevent a patented tea pot or film
feeder from being kept from tho public, because, as I have said, the
patenteo may keep them tied up at will while his patent lasts.
Neither is there any such interest to prevent the purchase of the
tea or films, that is made the condition of the use of the machine.
Tho supposed contravention of public interest sometimes is stated
as an attempt to extend the patent law to unpatented articles, which
of course it is not, and more accurately as a possible domination to

Motion Picture Patents Cc

established by such means,
the extent of the desire for the tea pot or film feeder, and if the
owner prefers to keep the pot or the feeder unless you will buy his
tea or films, I cannot see in allowing him the right to do so any¬
thing more than an ordinary incident of ownership, or at most, a
consequence of the Paper Bag case, on which, as it seems to me,
this case ought to turn. See Grant v. Raymond, 16 Pet. 218, 242.

Not only do I believe that the rule that I advocate is right under
the Paper Bag case, but I think that it lias become a rule of property
that law and justice require to bo retained. For fifteen years, at
least since Bement v. National Harrow Co., 186 XJ. S. 70, 88:93, if
not considerably cnrlier, the public has been encouraged by this
Court to believe that the law is as it was laid down in Heaton-
Peninsular Button-Fastener Co. v. Eureka Specialty Co., 25 C. C. A.
267, and numerous other decisions of the lower Courts. I believe
that many and important transactions have taken place on the faith
of those decisions, and that for that reason as well as for the first
that I have given, the rule last announced in Henry v. A. B. Dick
Co., 224 U. S. 1, should be maintained.

I will add for its bearing upon Straus v. Victor Talking Machine
Co., that a conditional sale retaining the title until a future event
after delivery, has been decided to be lawful again and again by this
Court. Bailey v. Baker Ice Machine Co., 239 TJ. S. 268, 272. X
confine myself to expressing my views upon the general and im¬
portant questions upon which I have the misfortune to differ from
the majority of the Court. I leave on one side the question of the
effect of the Clayton Act, as the Court has done, and also what
I might think if the Paper Bag case were not upheld, or if the
question were upon the effect of a combination of patents sueli as to
be contrary to the policy that I am bound to accept from the
Congress of the United States.

SUPREME COURT OE TIIE UNITED STATES.

No. 374.— October Term, 1916.

Jesse Isidor Straus, etal., Petitioners,! Certiorari to the Circuit
vs. I Court of Appeals for the

Victor Talking Machine Company.] Second Circuit.

[April 9, 1917.]

Mr. Justice Clarice delivered the opinion of the Court.

If will contribute to brevity to designate the parties to this
proceeding as they were in the trial court — the respondent as
plaintiff and the petitioners as defendants.

The plaintiff in its bill alleges : that it is a corporation of New
Jersey; that for many years it has been manufacturing , sound-
reproducing machines embodying various features covered by
patents of which it is the owner, and that, for the purpose of
marketing these machines to the best advantage, about August
1st, 1913, it adopted a form of contract which it calls a “License
Contract” and a form of notice called a “License Notice,” under
which it alleges all of its machines have, since that date been
furnished to dealers and to the public.

This “License Notice" which is attached to each machine and
is set out in full in the bill, declares that the machine to which it is
attached is manufactured under patents, is licensed for the term of
tho patent under which it is licensed having the longest time to run
and may be used only with sound records, sound boxes and needles
manufactured by the plaintiff ; that only the right to use the machine
“for demonstrating purposes” is granted to “distributors” (whole¬
sale dealers), but that these "distributors” may assign a like right
“to the public” or to "regularly licensed Victor dealers” (re¬
tailers) “at the dealer’s regular discount royalty”; that the
“dealers” may convey the “license to use the machine” only
when a “royalty” of not less than $200 shall have been paid, and
upon the “consideration” that all of the conditions of the “license”
shall have been observed ; that the title to the machine shall remain

6 Sl™setal.vs. Victor ralkin!r Machine Co.
with the possession of it; that it is not t»i» i
( tracing and keeping the plaintiff b USOd M a basis fc

A use of the machine, for no renort of ^ 03 to the c°ndition e
/ ,lho ^ultima^.. arf terl h.Lf^'Tt^ required fror
notwithstanding its apparently s*iX7 thoatlPulatcd price; thai
word “sale- and its“£ °f 7°, US° of «*'

most obvious requirements for securing a JotiAtf/0^ ,US°’”
the restrictions of the notice as to “i, » a °° a onforcement oi
by its own terms, the title to th. m„°i ,arc °«ntted ; and that, even
"ultimate users,” without further payment “ VCSts in the

except patiently waiting for patents to“wire on •1°D ?• tbeir part-
eo far as this notice shows, may or ivT “VOntlon3' which,
j machine. There remains for this “r?,/ *7 lnCOrporated in the
discover, the function only of “ &r 118 we can

I Plaintiff's machines to its agents and to *• P^e of

V cannot doubt is the purpose for wl,i l V , P"bhc' and tws we
Courts would be nerveiwlvVr '7*7 reaI ^ was designed,
eueh an attempt ns this "L,“ense nSc”"^ *° l0°k tbr°neh
sell property for a full price, and vet^o nf "S pl“in* is to

hf F SSKi

scheme of distribution is not ,S t°,t‘.° PnM“» interest. The
Plaintiff and to the public a reasonahT deS,f?d to “cure to the
tile grant of tile patent laws but is in w °f ltS machines, within
price-fixing enterprise, ,’S ill* *2 "l*™ “nd in fa“ a more
widespread injustice to innocent puiehS foT> W°rk ",,d

mzed that not one pimdmscr f 14 must bc rccog-

and that ^°t'onelir^^ml^reS^^^r^~TA^^~St,i!'^-~£2Ei™>
1101 n,,mh"” -fjie did renrlif

oIoar its real meaning ”nd pm™se° “■“•‘'than to mafe

•terms to call the transaction Intended to 1,"°“ f v ° pcrvcrsion 01
Of marketing plaintiff's machines 1 “MeenseTo ?. I,1"-*'"8 SySte“
Bmcr v. O'Donnell, 229 U S 1 IP ‘ SC the invention."

Convinced ns wo are «,„/« ' ’

Notice" Of plaintiff, eonS*dasS 17 °f this “^nse
its product, is not to secure to tl» l“ ltS scllcme for marketing
and as is contemplated by the patent's? t “S° °f its machines,
poorly-concealed purpose is to restrict « “’• bUt tllBt its reaI “ml
plaintiff had been paid for ST2?

Straus et al. vs. Victor Talking Machine Co. 7

the possession of dealers and ofjlm imbUe, we conclude that it falls
within the principles oF Adorns v. Burlee, 17 Wall. 453, 4 ,

and of Tinner V. O’Donnell. 229 II. S, lj. that it is, therefore, invalid,
and tkoTthe District Court properly held that the bill must fail

’it^ults^thaT'the decree of the Circuit Court of Appeals
, _ .1 n,»t flic District Court affirmed.

Legal Department Records
Motion Pictures - Case Files

Richard F. Outcault v.

Edison Manufacturing Company and Percival L. Waters

This folder contains material pertaining to the suit brought by cartoonist
Richard F. Outcault against the Edison Manufacturing Co. and Percival
Waters of the Kinetograph Co. in the U.S. Circuit Court for the Southern
District of New York. The case was initiated in April 1904 and involved the
alleged infringement of Outcault's copyright for his Buster Brown cartoon.
The selected items include an Outcault cartoon and a description of a motion
picture based on the cartoon, along with the bill of complaint and affidavits by
Waters and Edwin S. Porter. Among the items not selected are the
defendants' demurrer to the bill of complaint, the motion for dismissal, letters
and memoranda pertaining to the progress of litigation, and documents that
duplicate information in selected material.

The Kinetograrh Company

Characters and scenes in Buster Brown picture.

1st. scene,

4th. scene

5th.

Outcault making a sketch of Buster

Busters Revenge on the Tramp. Buster, Cook, & Tramp,

Buster & the Dude. Buster, 2 young Ladies, Young Man with
a dog, Tige. I ,

Buster makes room for his Mama at Bargain Counter. Salesman,
a number of young ladies, Buster comes in with Tige and
Mama, Tige sits on stool, Buster whispers to Tige.

Busters Joke on Papa. Kitchen scene, Cook, lobster Man,

Mama, Buster, Tige. Bed-room scene, papa sitting in chair,
Papa goes out, Buster comes in with Lobers puts them in
Bed, papa comes back goes to bed, in comes Buster and Mama
another scene, Buster eating with Mama |J,LA-L'5—

UiTsEers Dog to the Rescue. Cook, Buster, Mama and Tige.
Cooks puts CruHllers on shelf, Buster tries to go up by
ladder, Mama comes in, ties Buster to chair, tige comes in
climbs ladder and gets crullers and eats with Buster.

Buster & Tige put a Baloon Vender out of Business. Mama,
Tige, and Bustfer, four other Dogs, Balloon Man. Balloon
man walkingnin street, Mama & Buster come along, Buster
bunks into Balloon man, and is. struck by the latter, then
in runs tige and jumps at the Balloon man and four o'.her
gogs . end .

0-.3

Circuit Court of the United States.

, :

Southern District of Now York.

In Equity.

)

Richard F. Outcault, )

Complainant , )

against ) Bill of complaint.

The Edison’ Manufacturing Company )

■j >

)

i Circuit Court of tlie United States,

defendants. )

for the Southern District

of New York,

To the judges of the Circuit Court of the United

Richard F? Outcault,

; /

States for the Southern District of New York, in the Equity

; Complainant,

Circuit .

v. '

Richard F. Outcault of Flushing, Long Island,

l| The Edison Mfg. Co. et. al.

t^r.K-r

and a citizen of the State of New York, brings this bill

Defendants.

against The Edison Manufacturing Company, a corporation

organized under the laws of the State of New Jersey, and

Fercival L. Natters, doing business in the City of New York

■

1 (Copy.)

Bill of Complaint.

under the name, firm and style of The Kinetograph Company,

and thereupon your orator complains and says:-

That Richard F. Outcault is a citizen of the

United States and is the true and original author , designer

and proprietor of a series of pictures, sketches and car¬

toons collectively designated and known by the name and

■ *jtsJ

title of " Buster Brown" , which said design, sketch or car¬

toon was not known or used by others, before the origin,

invention, discovery and design thereof by the said Richard

F. Outcault.

That the said Richard F. Outcault on or about the

25th day of May, 1902, before an application for a copy¬
right on said name, design, picture and cartoon of Buster
Brown, had been made, for valuable consideration duly as¬
signed his right, title and interest and license to manu¬
facture, use and vend the said article etc. to the New Yorlc
Herald Company.

That the said New York Herald Company thereupon
afterwards before publication did deposit in the mail ad¬
dressed to the Librarian of Congress, at Washington, Dis*r;>
trict of Columbia, a printed copy of the title of the de-
sign, picture, sketch or cartoon known as Buster Brown,
and within ten days of the publication thereof, did deposit
in the mail addressed to the Librarian of Congress, at
Washington, District of Columbia, two copies of such copy¬
right article.

That the Librarian of Congress duly recorded tho
name of such copy right articles, in a book kept for that
purpose, and duly received his fees for the same, and tho
New York Herald Company having fully and in all respects
complied with all requirements of the law in that behalf,
and within ten days after its publication having filed two
copies of said design, sketch, or cartoon, known as Bustor
Brown, with the Librariad oil Congress who duly issued his
certificate of Copyright of the said (in or about the 25th
day of May, 1902, and on or about the said 25th day of May
1902, and by virt«ie thereof the said New York Herald Com¬
pany became and were the sole owners of all the rights
and privileges granted and secured in or intended to be se¬
cured In and by said copyright, as by reference to the

certi Cl cate thereof will more fully appear.

And your orator further shows unto your Honors
that on the 1st day of October, 190?,, the said Hew York
Herald Company by theirmassignraent of that date duly ex¬
ecuted, for valuable consideration, conveyed to your or¬
ator all their rights, title and interest in and to the
design, sketch and cartoon secured by the said copyright
and with the exclusive rights and license therein to man¬
ufacture use and vend the copy righted articles, during
the unexpired term of said copyright, and of all extentionc
and renewals thereof, as by the said instrument here in
court to be produced, if required, will more fully appear.

And your orator further shows that he is in tho
full enjoyment of the rights and interests acquired by him
as aforesaid, and that said rights and interests have boon
and are of great value to your orator, and your orator is
entitled to all the damage occasioned by the infringements
of the said copyright by the manufacture, sale or use of
the name, sketch/ design etc. , known as Buster Brown, mado
in violation of the said copyright and is by law, entitled
to sue for, and receive the same to his own use.

And your orator further shows unto your Honors,
that he believes, and therefore charges the fact to be that
he, the said Richard R. Outcault, was the originator and
first designer, sketcher and cartoonist ofthe name, sketch,
and design, copyrighted by him as aforesaid, and known as
Buster Brown, and described and claimed in the said copy¬
right a s aforesaid, and that the same was not known or use is

by any other persons before the authorship and origin by
him, the said Richard V? Outcault.

And your orator further shows unto your Honors,
that since on or about the 14th day of March, 1904, the
defendants w411 knowing the premises and the rights and
privileges secured to your orator, the said Richard F. Dut-
cault, by the said copyright, but contriving to injure
your orator and to deprive him of the profits, benefits
and advantages which might otherwise have accrued to him at

the city of New York, within the District aforesaid, and
at other places, have unlawfully and wrongfully made or use
or sold ordexhibited, and are now unlawfully and wrong¬
fully making or using or selling or exhibiting large quan¬
tities of machinery, contrivances, films etc, for the ex¬
hibition of pictures, sketches and cartoons of Buster
Brown, so copyrighted by the New York Herald ?oandrg§ signed

to your orator, and also making using or selling large
quantities of pictures, sketches and. cartoons, known as
Buster Brown, and (described and claimed) in said copyright,
and for tho purposes specified in said copyright, and in
violation of the exclusive privileges therein and thereby

granted to your orator as aforesaid, and in infringement of

said copyright, and of the claims therein contained; but
what quantity of the things copyrighted, produced as here¬
inbefore referred to , the said defendants have made or
used or sdld, or exhibited your orator does not know and
cann ot state, but upon information and belief your orator
avers that they have made or used or sold large quantitios
e, and are now making or using or selling largo

of the f

quantities of the same and that they have derived and re¬
ceived and ares till deriving and receiving, from such man¬
ufacture, ’.ise and sale great gains and profits, but to what
amount your orator is ignorant and cannot set forth, but
your irator believes the same to be the full amount of
five thousand dollars, and so charge the fact t be, and
prays that the defendant may be required to make a dis¬
closure of all such gains and profits-

And your orator further avers that the defend¬
ants continue to make or use, or sell or exhibit such pic¬
tures, sketches and cartoons and designs of Buster Brown,
and machinery, contrivances, films etc, for the manufac¬
ture, use or sale of the same, and refuse though warned and
requested, to desist from such manufacture, use and sale,
and exhibitions, or to pay to your orator such gains and
profits, by means whereof the defendants have injured and
are still greatly injuring your orator, arid have deprived
and are still depriving your orator of, andhave prevented
and are still preventing your orator from receiving the
gains and profits from the use of the exclusive right to
use the pictures, design, sketch and cartoon known as Bus¬
ter Brown, claimed in said copyright which your orator
otherwise and but for the said wrongful acts and infringe¬
ments of the said defendants would have obtained and re¬
ceived.

And your orator prays that the said defendants
may be compelled, by decree of this court, to account for a
and pay over to your orator all such gains, profits as have
accrued or arisen to, or been earned or received by the de-

fenrlants, or to which they my be entitled by reason of
such unlawful manufacture and use and sale and exhibition
by them of such pictures, sketches, carto-ns and designs,
manufactured in accordance with the designssof said copy¬
right, and all such gains and profits as your orator would
have received but for the said unlawful acts and doings
and infringements of the said defendants.

And may it please your Honors, the premises con¬
sidered, to grant unto your orator the writ of injunction
issuing out of and under the seal of this Honorable court,
or issued by one of your Honors according to the form of
the statute in such case made and pi’ovlded, perpetually
enjoining and restraining the said defendants, their clork:
attorneys, agents, , servants, workmen and employees, from
directly or indirectly, making or using or selling or exhib¬
iting to others any pictures, sketches, design or cartoon
of Buster Brown, described and claimed in the said copy-
rlght, or any machinery, contrivance or film for the man¬
ufacture of any picture, design or cartoon known as Bus¬
ter Brown, as d e s cribed., in~sai d— copyright,.

And may it please your honors to grant to your
orator a provisional or preliminary injunction issuing out
of and under the seal of this honorable court, enjoining a:
and restraining the defendants, their attorneys, clerks,
agents, servants, workmen and employees, and each and evorj
of them during the pendency of the suit and to the same
purport, tenor and effect herein before prayed for in re¬
gard to said perpetual injunction.

And that your orator may have such further or
other relief fin the premises as the nature of the cir¬
cumstances of this case may require ancl to this honorable
court may seem meet.

And may i t please your honors to grant unto your
orator a writ of subpoena of the United States of America
issuing out of and under the seal of this Honorable Court,
directed to the said defendants, commanding them on a day
certain therein to be named, and under a certain penalty
to be and appear in this Honorable Court, then and there
to answer all and singular the premises, and to stand to,
perform and abide such further order, direction and decree
as may be made against them.

And your orator aslln duty bound will ever pray &
Leon Raunheim: ,

Solicitor for complainant.

Leon Raunheim,

Of counsel for complainant.

United States of America.

Southern District of Hew York. SS:-

Richard F. Outcault, being duly sworn, deposoth
and saith that he is the complainant in the foregoing bill
named, and has read the same, and knows the contents there¬
of. That the said bill is true of his own knowledge ex¬
cept as to those matters which are therein stated to bo on
his information and belief, and as to those he believes it
to be true.

Sworn to before me this 30 day of

April, 1904. R. P. Outcault.

J. Sherman Moo 1 ton,

Notary Public 187 N. Y. County.

(Seal. )

(Endorsed. )

Circuit Court of the United States. Southern
District of New Yok. Richard P. Outcault, complainant,
against The Edison Manufacturing Company and Kinetograph Co.
Company, defendants. Bill of Complaint. Leon Raunheim,
solicitor for complainant, 38 - 44 Court Street, Brooklyn,
N. Y. U. s. Circuit Court. Piled May C, 1904. South¬
ern District. New York. John A. Shields, Clerk.

Outoault' vs. Edison Mfg. 0o«

J. R.^SchermerhOrn , Esq,,

^j/1 Edison Manufacturing Co,

\ ' n Your favor of | the 7th inst, haB been received with
let/ter and. enclosure from Mr. Dolheer, and 1 am giving this matter
proper attention^,

/j I. lii> view of, Mr. Outcault's apparently unfriendly pos-
it^nTand of hijs; failure to appreciate the disinterested nnturte of
our efforts to1 ^relieve him of embarrassment , 1 advised Mr. Moore
tO/go ahead w^Lth the "Buster Brown" f lifts. I requested |pim, how¬
ever, to withhold the sale of the "Buster Brown in a Department
-Store" film' until I could compare it with the original copyrighted
picture. -To thiB end, I asked Mr; Porter to have Mr. Smith make a
photograph "o f the original Outcault picture in the New York Herald,
and I am daily expecting thiB in order that I can compare the pic-

Youtb very truly,

■sxri '/m. , ; ■

RICHARD E. OUTCAULT,

Complainant,

. = . against . . .

THE EDISON MANUFACTURING COMPANY
and PERCIVA1 L. WATERS,

Defendants.

(Copy)

AI’EIDAY.IT,...OE....PERCiyAL.„.L......WAT.ERS.

FRANK E. BRADLEY,

CIRCUIT COURT OE THE UNITED STATES,

SOUTHERN DISTRICT OE NEW YORK.

. *

RICHARD E. OUTCAULT , )

Complainant, )

)

- against - )

) IN EQUITY.

THE EDISON MANUFACTURING COMPANY )
and PERCIVAL L. WATERS, )

Defendants. )

)

UNITED STATES OE AMERICA )

STATE OE nm YORK ) BB.

COUNTY OE I'UW YORK. )

PERCIVAL L. WATERS, being duly sworn , on oath
states that he is one of the defendants herein; that his
business is that of selling machines, films, eto. for moving
pictures und exhibiting moving pictures; that ho has a
place of business located at 41 East 21st Street, New York
City; that he purchases his said goods from the Edison
Manufacturing Company; affiant states that he has read the
bill of complaint filed herein and denies that he has ever
copied or attempted to copy or made any colorable imitation
of the alleged copyrighted article described or attempted to
be desoribed in the said bill of ooraplaint; he also denieB
that he has ever made, used or sold or exhibited any
machinery , contrivances, film, eto., for the exhibition of
piotures, sketches, cartoons alleged to be copyrighted in
said bill of complaint, nor is he now making, using or
selling any pictures, sketches, and cartoonB described and
claimed in the alleged copyright mentioned in said bill of
complaint ;

Affiant further states he has read the affidavit of

: plaintiff filed herein dated April 30th, 1904; he denies

. that the said Rising therein mentioned ever was v. i

h.ls agent

- 2 -

or in his behalf approached plaintiff for the purpose of
making any representations whatsoever, nor did affiant have
any knowledge of the faot that the said Rising was going to
see plaintiff at the time;

Affiant also denies that ha ever admitted to
plaintiff that any arrangements whatever had not been made
with Mr. Raymond as alleged in the said affidavit; in fact,
the first intimation affiant had that there was any one by
the name of Raymond connected in the matter, oame from
plaintiff himself at a conversation had about the first of
April with plaintiff when affiant learned for the first time
that there was such a person by being told of the fact by
plaintiff himself.

Subscribed and sworn to )

)

before me this 20th day )
of May, 1904. )

J}[. (Z.

CIRCUIT COURT OF THE UNITED STATES,
SOUTHERN DISTRICT OE NEW YORK.

IN EQUITY.

CIRCUIT COURT OE UNITED STATES
SOUTHERN DISTRICT OF NEW YORK.

RICHARD F. OUTCAULT,

Complainant,

. j= . against . — . .

THE EDISON MANUFACTURING COMPANY
and PERCIVAL L. WATERS,

Defendants.

.. AFFIDAYI T....OF....EDWIN....S .....PORTER ...

FRANK E. BRADLEY.

ATTORNEY AND COUNSELLOR AT LAW,
DUN BUILDINQ, Q90 BROADWAY,

RICHARD F. OUTCAULT, )

Complainant, )

- against - )

THE EDISON MANUFACTURING COMPANY )

and PERCIVAL L. WATERS, )

Defendants . )

)

-i

IN EQUITY.

i UNITED STATES OF AMERICA )
n STATE OF NEW YORK ) SS.

COUNTY OF NEW YORK ) !

EDWIN S. PORTER, being duly sworn, on oath
! states that he is employed by the Edison Manufacturing
;! Company, one of the defendants herein as a Photographer to
j! take pictures for the Kinetosoope; affiant states that he j
j| has read the Bill of Complaint filed herein, and of his
| knowledge, and he be lieves he is iB a position to know it to
j! be a fact, that the said Edison Manufacturing Company have
jl never copied or attempted to copy or make any colorable
jj imitation of the alleged copyrighted article described or
attempted to be described in the said Bill of Complaint, and
ax that they havenever made, used or sold or exhibited any j
machinery, contrivances, film, etc. for the exhibition of
pictures, sketches, cartoons alleged to be copyrighted in
said bill of complaint, nor are they now making, using or
selling any pictures, sketches, and cartoons described and
claimed in the alleged copyright mentioned in said bill of
complaint ;

Affiant further states that he has read the affidavit
of plaintiff filed herein dated April 30th, 1904, and denies
the statementtherein made that the said Will S. Rising
referred to was an agent of the Edison Manufacturing Company;
affiant states that the said Rising had been employed by him

j and aot

I to pose^in various pictures from time to time,and that one
I day said Rising suggested to affiant that as he was an uncle
of the said plaintiff he might he able to. secure plaintiff's
consent to the construction of a"Buster Brown" film; the
suggestion arose with the said Rising and affiant told him
if he could obtain this, it might be worth his while;
thereupon, Rising went away and returned shortly with a
communication in plaintiff's handwriting of which the fol¬
lowing is a copy:

"Wednesday

"March 2nd 1904

"Mr. Ed Porter

"Manager Kinetograph Co.

"Dear Sir

"You have my permission to use Buster Brown on
"the machine- and I will be in early next week and pose
"for you in the aot of drawing Buster if you like.

"Most Sincerely Yours,

"R. E. Outcault"

Up to this time, affiant never had heard of any one
by the name of Raymond in this matter, nor did he know that
there was a "Buster Brown" show on the road; a few days
thereafter, plaintiff, on his own suggestion, came to
affiant's gallery and posed for the opening scene of the
"Buster Brown" film; several conversations were had with
plaintiff in which plaintiff expressed not only his willing¬
ness but his pleasure over the idea of having the film
publicly exhibited, not only for the advertisement of the
character of "Buster Brown" but also for whatever advantage
there might be in it to the said Rising; plaintiff said
among other things on more than one occasion that Rising was
in financial difficulties and that whatever Rising got out
of it, he would be satisfied with;

Affiant further stateB that the film axdx thereupon

- 3 -

was made up and perfected and exhibited to the public with the
knowledge and permission of the plaintiff, the said
representations as shown on the screen being original in
idea and entirely dissimilar in every respect, not only as
to characters, scheme, etc., from the alleged copyrighted
article mentioned in the said bill of complaint.

Subscribed and sworn to )
before me this 20th day )
of May, 1904. )

///.

notaky pubuc,

COUNTY Of NEW YORK!

Memo, for Waters' .Affidavit

" After that understanding that Rising was posing in
moving pictures for the Edison company, something was later
said about his having made an arrangement with Outcault for
the making of a series of "Buster Brown" pictures. The idea
of a "Buster Brown" film originated with Porter and Rising
suggested that he could get Outcault' s permission on account
'of his relationship. No knowledge was had at this time by
either Waters or Porter that Outcault had parted with any of
his rights whatever that were in the name "Buster Brown"
or the copyrighted cartoons. (It was Rising’s own idea of
going to Outcault to get the permission) . Porter suggested
to Rising that he would make it worth his while if he got the
permission from Outcault.

"The next I heard of the "Buster Brown" pictures
was one day when Mr. Outcault came in my office and said that
he had just been up i>n the Gallery posing for the opening
i strip of the "Buster Brown" film (Ascertln this date). He
was very much interested in the natter and suggested that he
would be very glad to do anything for the Edison people that
he could in posing for pictures. He said he expected no
compensation for himself — whatever arrangement was made with
Rising was all right. He said the "Buster Brown" subject
; was such a populat one, he had no doubt the pictures would
make quite a hit in the kinetograph and that he would be
| interested to see his own picture. He said if he could get
j up something else later, he would be glad to do it.

The day of thiB conversation was the first time
| affiant had met plaintiff since they had formerly met in
Paris in 1399, and there v/as sort of a talking over of old
times. Outcault also stated that he knew Mr. Edison very
! wel1 and had met him in Pxk± Europe and was personally with
Mr. Edison quite often in Paris, and for that reason he was

- 2 - ''

very glad to Tie c.f any assistance to Mr. Edison or his
interests.

The next thing affiant heard in connection v/ith the
matter was a letter received from Mr. Prank W. Sanger dated
March 28th, 1904. "On the same date, plaintiff called to see
Mr. Porter and dropped in my office stating that he had been
informed ilrac of considerable trouble about the "Bus ter Brown"
pictures; that it would seem he had given the right of these
pictures to some theatrical concern whose name was not then
disclosed by plaintiff. I told him that I very much regret¬
ted any trouble as I felt we 7/ere old acquaintances and it
seemed too bad any false move of his should have been embarr¬
assing to him and that if there was anything in the matter
I could do I would be only too glad to do it, and he then
suggested that I see Mr. Raybond whom he claimed had the
rights from Mr. Sanger (This is the first time affiant ever
heard of Baymond in connection v/ith this matter). I asked
him then , who is Mr. Raymond, and he said he is the one who
has the "Buster Brown" show out and is president of the
Morgan & Wright Lithographing Co. He suggested that I Bee
Mr. Raymond and I told him at the time it was impossible to
get out of the office, but I would meet him later on when I
could. He said he was going to Mr. Raynond’s office
immediately and in the course of a short time would call me
on the ’phone . He said that he had talked with Mr. Raymond
in the mal:ter who was very liberal in his views and was
willing to talk the natter over with the view of effecting
some satisfactory arrangement regarding the pictures so as
not to embarrass him in the contract which he had with
| Raymond. He called me on the telephone a little later and
; said that Mr. Raymond would see me at an hour named.

| Pursuant to that arrangement, I called at Mr. Raymond's office
and talked the matter over with him and he stated that he had
the exclus ive rights from Outcault and that the pictures had
been made without his knowledge, further claiming that his

-3“

rights were being infringed. I asked him if he had any
suggestions to make with regard to the pictures and he said
none whatever, and X then asked him if it were possible for
the owners of the pictures to suggest a royalty basis to
me . He said he would think the matter over and asked me to
call at a later date. X then called by appointment about
two days after. Mr. Raymond stated he had thought the matter
over and decided the pictures mjist not be exhibited. I
asked him to give me this in writing, which he did in the form
of a letter dated April 2nd, 1904. Mr. Raymond told me that
he had exclusive rightB to "Buster Brown" and I then suggested
it was rather queer that Mr. Outcault should have gone ahead
with the arrangement which he had made with Mr. Porter.

Mr. Raymond then laughingly remarked that if Outcault were
up on legal matters he would probably not be a good cartoon¬
ist. X told Mr. Raymond I was very sorry we could not come
to an arrangement so far as I was concerned and that until
the matter was finally adjusted I would give Outcault what
assistance I could in light of the embarrassing situation he
was in between the two parties.

At the time X had five or six sets of the film, and
immediately discontinued the use of them temporarily which
was considerable financial loss.

Affiant further states that he expressly stated to
the plaintiff that he would stop using the pictures as a
matter of courtesy to the plaintiff and not as a matter of
legal obligation; and the same statement affiant made to
Mr. Raymond.

Affiant further states that never at any time did he
cause the said Will S. Rising to make any representations to
the plaintiff or anyone else that the "Buster Brown"
pictures referred to 1b rein were to be used in connection
with Mr. Raymond nor did he ever hear anyone say that the
said Raymond had made such statements until a matter of abbut
two weeks before the date of this affidavit when the said

plaintiff called upon affiant and stated that he understood
that Rising had gotten the privilege for the pictures for
Mr. Raymond's show (Find that date).

In the first conversation with Outcault m commenting
upon the value of the "Buster Brown" pictures, it was subject
of general remark by Outcault, Porter and affiant that the
"Buster Brown" was so prominent before the people there
would be very general sale for the pictures , and the
plaintiff at the time knew it was contemplated that the
films would be used for sale. Outcault asked affiant when
and where the pictures would be exhibited and he was told
it was affiant's intention to put them on in all the
theatres possible as quickly as they were finiehed.

I'W-V'W

'? (( ? ) l & ?

1 (

v .

Memo, for Affidavit of Mr. Porter.

The idea first originated by a man named Anderson
suggesting a scene of a boy stealing jam (Buster Brown then
not thought of). Then Mosier came along with a trains d dog;
assembled boy and dog into jam scene. This led up to
assembling a series of these pictures on different subjects.
Dyer was consulted to see if there was any infringement in
this. Advised later by Dyer than no infringement was made
and they could even use the title. Porter had carefully
abstained from copying any of the original "Buster Brown"
cartoons in his subjects. About five subjects in the
series up to that time. Some time the latter part of Febru¬
ary or first of May, Rising said to Porter, "Dick Outcault
is a nephew of mine, and I think I could get his permission to
use the name "Buster Brown" (This idea had re ver occurred
to Porter before this time). I stated to Rising, "All right"
and that if he could secure permission from Outcault to use
the title, I would make it worth his while. I gave him money
to go to Flushing to pay car fare and expenses. Rising, I
think went over that afternoon or the following day, return
ing with the letter of March 2nd from Outcault, and sals
everything was all right. This is the only letter Porter had
ever received from Outcault. Porter knows writing to be
Outcault's because he has compared it with Outcault' a signa¬
ture on his cartoons.

"I told Rising I was very anxious to wind up a
series of pictures and that awiting until the following Monda
or Tuesday would delay getting them out and X suggested that
I go to Flushing, take my camera and take the picture of
Outcault making a sketch of "Buster Brown', Outcault himself
having suggested that he pose for that, as stated by Rising."

Within a day or two Rising and Porter went over to
Outcault's house and found he waB very buBy. "We had quite a
chat with him in general ard 1b spoke of the "Buster Brown"

shio-w and Raymond, and that was my first knowledge that there
was a "Buster Brown show in existence. He spoke of the
business they were doing, and during our conversation he
said the great trouble with the show was there was not enough
"Buster" in it to please the children and ladies; that the
sucoessof the "Foxy Grandpa" show was that it was confined to
the hoys and grandpa. He mentioned at the time a vaudeville
turn that they used in the play, the six Cuttys; that they
were paying $600 a week for, and it had no haring on the
•Buster Brown' show. I suggested why wouldn't it te a good
idea if the pictures were a success to have Mr. Raymond put
a machine on showing "Buster Brown". He thought it was a
very good idea dnd said he would suggest it to Mr. Raymond.

He then said, "I am very busy, there is a gentlemen Upstairs
for whom I am making a sketch" and he suggested that I come
up with him and wait for Rising who was talking to some member
of the family; Outcault said he could not pose for us that
day, but when Rising returned he said, "Now, I have an
engagement with Pach, the photographer on Broadway, to pose
for a picture on Sunday morning; why can't I kill two birds
with one stone and stop in your pice Sunday.?" The following
Sunday he came there and posed for the picture. After
securing his sanction for using the title, we thought it would
be a good idea to put in one more scene, one of his own, the
Bargain Counter. This is the reason the "Bargain Counter"
scene was added. At this time and at other times there were
conversations with Outcault in which it was thoroughly
understood that defendants were going to market these goods
as they saw fit.

In talking about Rising on the day we called at
Outcault' s home, he said, "Will is in lard luck" and that
he was merely doing this for Will's benefit; that anything
Will got out of it he would be satisfied with. Outcault made
practically the same statement when he called on Mr. Waters.
After the receipt of the first Sanger letter by the Edison
Company, Outcault called at Waters' offioe and Porter was

present, and Outcault made, in effect, the same
that he did this solely for Rising’s benefit in
he might get some benefit out of it. Only the
were present at that time.

statement
the hope that
three named

Legal Department Records
Motion Pictures - Case Files

Triple Damage Suits

This folder contains material pertaining to damage suits brought against
the Motion Picture Patents Co., Thomas A. Edison, Inc., and other licensed
manufacturers by the Chicago Film Exchange, the Theatre Film Service of
San Francisco, and other licensed and unlicensed exhibitors. Most of the
cases were initiated in April and May 1916, after the federal government's
antitrust case against the Motion Picture Patents Co. was settled by decree
in February. The plaintiffs sought triple damages from the defendants under
the provisions of the Clayton Antitrust Act of 1914. The selected items
include correspondence by Edison and by Delos Holden and Henry Lanahan
of the Legal Department concerning the defense and the eventual settlement
of the suits. Among the items not selected are bills of complaint and
correspondence regarding the progress of litigation, legal fees, and legal
representation.

DeiOB Holden, Esq.,

Legal Dept., Thomas A. Edison, Inc.,

Orange, H.J.

My dear Mr. Holclen: —

Confirming my telephone message to Mr. Unger, you
will undoubtedly be pleased to learn that the Chicago Film
Company triple damage suit, the first of all of them to be
reached on the calendar, was put over by Judge Learned Hand
this morning to. the May, 1917 term. He did this because yes¬
terday the Supreme Court set April 9th as the date for the ar-

with

gument of the appeal in the Government case. Of course, this
precedent there can be no question that the remaining triple
damage suits will likewise be postponed, as they are reached,
to the same term.

Incidentally, it is highly improbable that the Gover¬
nment will be ready to argue the appeal in the Government case
on April 9th, so that it is more than likely that there will

no decision by the Supreme Court until next Fall.

Robert. H. McCarter, Ksq., , V, \ \

Prudential 31dg., A \

Newark, M.J. \

My dear Mr. McCarter: — ^ '

Pursuant to your suggeotion, I- oawNJurfcje Learned 'j,;-.' ■
Hand yesterday afternoon at/fheAvlooe pf.hia court and had .
quite a long talk -with him; /~\Hdv remembered that he had , . '

put over the cases to tl>e Kny term ]andA, when I told him \ ;

that another cane whiohC wa^not/onythe calendar at that
time would possibly be rSa.onqd/in/April, ho said "Of [t

oourse that will also go over to7 the May term". Later on y
he looked up the Clgrk'e calendar and .-found that in no \v

event would the Sdirptinor oaeb. b\reabhe.d before the middle f\\
of the month, rtfdJrsssaid thatin aj>y event, he would not
have time to try/ut t^sNirionth even. if f thp. plalntiff
attempted to jrto' it.,;V:\ . f

TText\nonth Judgi Mhyor will, n.oid the oommori law
calendar and Judfes Hqnd Jeaidf that he would speak to \
JudgO/MSybr about thcSatudt ion and that .1 .-should see ‘.Judge
Mayer sometime nexKqsek, whioh of course; I shall' do,.

| ( The^e\is a possibility apparently, by reason ', of
two o'* three additional judges viho will be here in June!
that one of the ana as might be tried then. I rather H •
irathexedNthe i-mp/ession that Judge Hand would not be ino, lined
himoel^vtoAh<ntl/up the trial of these oaBee if plaintiffs
' urged thbmjjfpr he remarked that he.. thought the, defendants
had already reoelved considerable consideration. |v

It was quite humorouB to see the quiok way,::in\
whioh he assured me that they (the judges) would not. permit
their courts to be tied up for a whole year in the.' t.riql ; .

of those oanes, this remark beingvma^e when I- said' there I
were twelve of them and that probably " it' would- take ;,a month
to try each. I told him that he Bhould not blame, "uis*: that
so far as we are oonoexned, we did not oare if they' were nev¬
er tried, and that we oertainly did not bring thb .sujite.

As I have said above, I shall see Judg/S.; Mayer this
coming week and probably shall be able to write ,yi6u d>ore.’:

GENERAL FILM COMPANY

4-40 FOURTH AVENUE

Thomas A. Edison, Ino.,
Orange, H. J.

Gentleman: -

April 14, 191'

( nnom'vr " ;

APR 1Q1S1? |

^ C. II. V.'HSON j

At a hearing before Judge Mayer held Thursday,
April 12th, oounsel for plaintiffs and defendants in the
treble damage suits being present, and at which the defendants
requested a postponement of the trials of these oases until
after October 1st, when the hearing on the appeal in the
Government Trust suit will be had before the Supreme Court;
the Court ordered the trials to begin on the second Monday
in May, the Chicago Film Exchange case to be taken up first.

It Is now of extreme importance that our oounsel
concentrate on preparation for trial. The question of fees
needs immediate attention.

My understanding of the legal representation for
the various defendants is as follows*

Thomas A. Edison, Ino.

By MoCarter & English

Motion Picture Patents Co.)
Blograih Co. }

By Mr. Kingsley

Essanay Manufacturing Co. )
Selig Polyscope Co. )
George ELeine j

By Mr. Henry Melville

Vitagraph Comiany

By Mr. Edmonds

Paths

By Coudert Bros. (Mr. Samuels)

General Film Co.

By Mr. R. 0. Moon

Various defendants

By Hr. H. 0. Moon, Mr. Allen %
and Mr. Geo. F. Soull.

Various parties in Interest have decided' it to be
imperative that a material sum of money to cover the expenses of
oounsel aoting in the interest of all defendants be subscribed.

General Film Co.

I New York.

-2-

thb soun Frnro

11 subscribers at $250.00 each $2,750.00

Paid to April lBt $1,565,60

Bill rsndersd April 1st 570.75

1,936.35 1.956.35

Available balance - 813.65

GEHEBAL FOIIP FOR ATTORNEYS' FEES AMD OTHER PURPOSES

Fuad to pay for counsel, 6 subscriptions at $500 each - $3,000

Subscribers are the following: General Film Company,

Kaletn Company, Vitagraph Company, Sellg Polyscope

Company, Essanay Manufacturing Company and George Kleins.

Mr. Samuels has recommended to Pathe that they subsorlbe

an equal amount* •

While individual and general oounsel having these treble
damage suits in hand, have labored industriously on these oases, it
seems necessary that there be Intensified co-operation among the
defendants. The decision in the first case will establish a precedent
of the utmost importance. While the plaintiffs may have selected it
because of its assumed strength, there are several points involved
which may, in fact, turn the selection of this plaintiff for the
opening trial to the advantage of the defendants.

Several subscribers who have been interviewed in the
matter have suggested an additional appropriation of $2,500 from eaoh-
defendant, that there be a working fund whioh will adequately take
care of legal fees.

Ur. Allen has submitted bills for his services amounting
to about $3,000, viilch have not yet been passed upon.

Judge Moon asks as general counsel a fee of $5,000, whioh
la not in full for services in this cause.

One subscriber suggests the engaging of oounsel of national
reputation with speolal knowledge of the Sherman law, and has submitted
four names known to all of the defendants. It may be too late to engage
suoh oounsel, but inquiries will be made immediately and the results
submitted.

The writer has been asked to take up this matter of eub-
Boriptions. Will you kindly address him at #63 East Adams Street,
Ohioago, from Monday, April 16th, to Tuesday, April 24th. letters
mailed on the Twentieth Century at 2:45 on any day. will be delivered
in Chicago the next morning at about 11 o’olook. 1

General Film Co.

New York.

It la necessary that all defendants he warned
that lethargy at this stage may lead to disastrous consequences.

Manufacturers who have correspondence or other
matter in the files covering transactions with the Chicago
Film Exchange, and if such matter has not yet been tshen up
with Ur. Soull, are ashad to communicate with him immediately.

gk/pg.

Very truly yours.

Mr. Wilson:—

At your request and for the information of Mr .Edison
and yourself, I summarize below a number of matters concerning;
which I have advised you from time to time recently.

Damage Suite

The appeal in the Government Anti-Trust suit against the
Patents Company and the Edison Company was originally set for hear¬
ing by the Supreme Court on April 9th, and on the strength of this
the Courts here had postponed the trial of the triple damage suits
until May. The Department of Justice was not ready to argue the
oase on April 9th, however, and the appeal was set over to October
2nd. The Courts here have refused to hold up the trial of the
damage suits until after the Supreme Court can pass on the
Government oase and has set the first of these suits for trial on
May 14th, 1917. That suit is one brought by the Chicago Film
Exchange, a concern not licensed by the Patents Company, but one
with whioh the Edison Company and a number of the other lioensees
were dealing up to the time the Patents Company was* formed. At
that time all of these companies, including the Edison Company,
stopped dealing with that exchange, and it now olalms that it
was damaged by being deprived of its source of Bupply. Its
claim, whioh of course is highly padded, is for $1,400,000. whioh
it asks to have tripled.

In these suits the Edison Company is represented by
Mr. McCarter and I have been spending considerable time with him
personally, and in faot, all of my time on this oase, because

C.H.V7,

C-- /LMB - V 24/17

all of the defendants are looking to me to prepare the faots
for presentation. At the end of an interview yesterday with
Mr. McCarter, he agreed that he and I would, on May let, 1917,
bury ourselves here in New York at some place where we oould
have the necessary papers to work with, but where no one would
know where we were bo that we oould devote the two weeks, before
the trial to concentrated preparation. You will, of course,
appreciate that this first case ia the test case, and in fact,
because we have no Supreme Court decision, we are in the position
to raise the same defenseB in this suit as we did in the Govern¬
ment case and have them tried out precisely as if there never
had been a Government case. While the judges here in New York
will be respectful toward the decision of Judge Dickinson in
Philadelphia, we are confident that they will not be Influenced
by it .

Last Tuesday there was a conference of all the oounsel
representing the different defendants in the triple damage suits,
and it was expressly agreed that Mr. McCarter should croes-
examine the witnesses and make the opening address to the jury
and it was evidsnt that it was also desired that he should at
least assist in tha summing up. There will be no difficulty,
therefore, in my opinion, in having our plan of Mr.MoCarter
virtually being the counsel in charge of the case, aooepted by
the other counsel, suoh other oounsel, however, aiding in the
work.

I have repeatedly told Mr. McCarter that the Edison
Company wlehes him to defend these suits precisely as if it were
the only defendant, and that he were the only oounsel in the oase

•C.H.W.

GFS/LMB - 4/24/17

so that there oould be no question of dividing his responsibility .

Poraonally I have laid aside all of my other nork and
am concentrating also on this damage suit, for I do not know of
anything of sufficient importance which cannot be deferred until
after the trial of this first case.

— -00O00—

Latham Patent

The recant deoislon of the Supreme Court on the suit
by the Patents Company against the Universal Company on the
Latham patent has the effect of determining finally that we
cannot enforce the restrictions on the patent plates on the pro¬
jecting machines sold under the Patents Company's license.

In order to arrive at this conclusion, the Supreme Court flatly
overruled its own decision in the Diok case whloh te had been
following in our contracts.

The validity of the Latham patent has not been disturbed
in any v/ay nor passed on by the Court, and the patent is therefore
ao good today as ever. It expires in August, 1519.

Some time since we started a suit against a dealer
in Philadelphia based on the sale of a Power machine, this suit
being to test the validity of the patent.

In view of the decision of the Supreme Court and the
short term of the patent, it is my belief that the Patents
Company should now reach some definite understanding with the
machine manufacturers by which they would all pay a royalty. It
seems to me that almost anything we oan get out of the patent
should be aooepted. The Nicholas Power Company at the time it

C.H.V7.

U.-s/LMB - 4/24/17

stopped paying its royalties, asserted that it would continue
to pay, if we' would reviee the lioenoa agreement so sb not to
compel it to do the thing whioh the Supreme Court now eaye we
cannot enforce. But in the meantime hack royalties amounting
possibly to §15,000. or §20,000. have accrued, and it is
doubtful whether they would now come in and pay the back royalties
rather than take a chance and fight.

The Patents Company is getting a small revenue from one
machine

of the/ manufacturers which is just about sufficient to pay the
operating expenses, hut not enough to pay the lawyers’ fees whioh
have accumulated in connection with this litigation over the
Lathera patent, and its chare of the defense of the damage suits.

It is desirable for the present, however, to keep the
Patents Company in some sort of position where its papers can he
readily accessible because its records are and will he in con¬
stant use in tho preparation and defense of the damage suits.

I am of the opinion _that it will be beot to leave the
Patents Company situation as it is until after the outoome of
the damage suit is determined, and then if there is a pause be¬
tween the trial of the first and seoond’ of euoh suits, take up
seriously the matter of the future polioy as to the Patents
Company,

Delos Holden, Esq.,
Thomas A. Edison, Inc.,
Orange, N.J,

My dear Holden:--

You will reoall that some time back you suggested
a scheme by which the Edison Company could be protected in
the event of an adverse judgment in the ooming damage suit.

I think it is highly desirable for you to oommenoe to lay
plans and have the neoessary arrangements made to oarry out
suoh a scheme beoause, while we are hopeful of the suit,
it is not by any means a certainty that we will not have a
heavy judgment against us.

The situation of the case is about like this:

Judge Mayer has said that if the plaintiffs use the Government
decree and obtain a judgment, then he will stay the collection
of the judgment under some sort of conditions at present
undetermined so that, in the event Dickinson's decree is re¬
versed in the. Supreme Court, we will get a new trial as a
matter of right. Then too, because of the number of in¬
volved questions, ' which"1 will oome up, it is highly probable
that we could, by giving a supersedeas bond, Btay the oolleo-
tion of the judgment.

But you will note that either of these would probably
involve the giving of a bond beoause while a levy might be
made on real estate and beoome a lien on the property pending
the appeal, most of the assets of the various defendants is
in personal property, and of course, no such lien is possible.

I think, therefore, that you should also be prepared
to arrange for the giving of a bond. Under the oireumstanoes
of the case, this will probably have to be a joint bond for
the entire judgment beoause obviously the plaintiffs would not
accept a separate bond for any portion from any one of the
defendants. Inasmuch as the Edison Company is probably the
most obviously solvent one of all of the defendants, the
largest portion of the burden of showing assets to support such
a bond will probably- fall on the Edison Company.

I am writing this, not by way of making any suggestions,

Delos Holden, Esq.

5/VH

but merely to advise you of the situation so that you can act
in the interests of the Edison Company as you think best.

Yours very truly.

GFS/LMB

Robert H. McCarter, Es<j., 3

Prudential Building,

Hewark, R. J.

Dear Hr. McCarter:

I understand that an agreement has been reached for tho
settlement of the suit of Chicago Film Exchange vs. Motion Picture
Patents Co. ot al and tho companion suits in which the plaintiffs
are represented by tho same attorney as in tho suit mentioned, as
discussed at our recent conference, and that the amount to be paid
by Thomas A. Edison, Inc. iB <3100,000. I hand you herewith
checks drawn to your order for this amount to be used for this
purpose.

Mr . Edison relies entirely upon you to protect the inter¬
ests of Thomas A* Edison, Inc., Motion Picture Patents Co. and
Edison Manufacturing Co. in this Battlement and to secure from the
plaintiffs such instruments of release or otherwise aB may be
necessary for such protection.

Kindly acknowledge receipt and oblige,

Yours very truly,

General Counsel.

EUCLS.

DH/JU

Juno 11, 1917

George P. Scull, Esq.,

149 Broadway,

Hew York, U. Y.

Bear Hr, Scull:-

Hr. Wilson would like to havo you write up a sort of
resume , telling what was done in the recent settlement of cer¬
tain treble damage suits, including a list of the suits settled
and the amount paid by us and each of the other defendants in
each of the suits. Also, please tell what happened in the
Sampliner suit,

Kr. Wilson wo^ld also like to have a list of any other
such suits that are pending and a statement of your views as
to the likelihood of there being other suits.

Will you kindly send a couple of extra copies so that
we may have one for this department and one to turn over to Hr.
Edison,

Yours very truly.

Hi-JS.

(Personal)

Henry Lanahan, Esq.,

Legal Dept.,

Thomas A. Edison, Ino.,

Orangey N. J.

My dear Mr. Lanahan:

I have yours of the 11th inst., and enolose

three oopies of memorandum whioh I think .covers what Mr.
Wilson has in mind.

[ENCLOSURE]

1 I

! Ra : Settlements of Damage Suita

Kie following damage suits have been settled and
releases (exoept Miles Bros.) obtained from the plaintiff
oo ipo rations , and from the individuals connected with them:
Chioago Film Exchange
George Melies
Eugene Cline
Samuel Sohiller
U. 3. Film Exchange
Standard Film Exchange
Colorado Film Exchange
Theatre Film Service of San Francisco
Imperial Film Exchange (fruesdale, Receiver*
Miles Bros.

Globe Film Service
Royal Film Service

In the case of Milos Bros., the settlement has been
effeoted, but because Miles Bros, wont into bankruptcy some
years ago, it was deemed unsafe to deal directly with them.
Consequently, both sides have agroed to the settlement and
the releases and money will be exchanged when it is determin¬
ed to whom the money shall be paid, the money in the meantim||
being placed in the hands of ex-Juage McCall, as trustee. ''
By separate agreement, about 1/6 of the settlement ii
each case was also placed in the [hands of ox- Judge McCall
to be paid to the plaintiffs at the end of Hovember 1917,
provided they have in the meantime stirred up no more litiga¬
tion, or become interested in no similar litigation.

[ENCLOSURE]

| In the oa8e of Globe Film Service ana the Royal Film

Service, settlement was made directly with the plaintiff for
the lump sum of §2500, for both oases. The attorney has
a lien of 60# of the recovery, and we reserved enough from
the total settlement to pay this lien.

The total settlement amounted to $326,000. Of
this Edison contributed §100,000., Biograph §50,000., and
Vitagraph, Pathe, Kleine, Selig, Essanay, Kalem and General
Film §25,000. eaoh.

The above is the list as given out, but I have
reason to believe that the General Film share was made up by
possibly three or more of the others, and I have also reason
to believe that Selig' s share wbb advanoed by Kleine and
Spoor.

In the only other remaining suit, that of Samplinei ,
after negotiations to settle on any reasonable basis had
fallen through, we went to trial last week on the single issue
as to whether or not Sampliner, who is a lawyer, in buying
the claim had been guilty of champerty, so that he could not
maintain a suit. After trial, lasting one day, the Judge
directed a verdict for the defendants and dismissed the oom-
plaint. There may be an appeal from this , but it cannot be
heard until next fall in any event.

The foregoing acoounts for all of the suits brought
and settled. There is a possibility, but hardly a probabil¬
ity of two or three more suits being brought, as there are
some people who have as good a oauso of action as those with
whom we have settled, but there are various reasons which lecd '^
me to believe that such suits are hardly likely. One ohief
reason is that I believe that Cookran & Wanton combed the

[ENCLOSURE]

country pretty well for possible oases, and if their canvass
did not suooeed in stirring up litigation, it is hardly
likely that anything else will. In any event, any suits
brought from this time on will have the greater part of the
alleged damage barred by the Statute of limitations .

June 13, 1917

George S’. Soull

2ha above case, as you know, was filed many months ago,
the defendants being the same as in all of the other previous
triple damage suits. Service was had on a number of the defen¬
dants long ago, but, for some reason, the plaintiff did not at¬
tempt to serve any of the 3dison defendants.

Mr. Dyer has sent me a copy of the complaint which has
just been served on him and I presume that you will wish me to
look after this case the same as I did the others.

Plaintiff 4s attorney hasv as you will also recall,
been attempting to settle this case and I talked to Kingsley .
again this morning about it, It seems that plaintiff's attor¬
ney is willing to settle for $5000.00 which is really more than
the case is worth so far as its merits are concerned , but probably
■less than it would cost us. to prepare for trial, let alone ac¬
tually try the case. I think it i3 likely that he will be will¬
ing to allow each of the corporations, together with the individ¬
uals, in whom such cbrporation is interested,, to buy peace at
$500,00 each, and personally I think that if will be advisable

'(»

Delos Holden, 3s4.«...8*...^'Jan. 21, 1919.

lor the Sd^Ron Company to do this. 'Dhere are further con¬
versations to be had and possibly t^iis price oan be cut
some .

Will you please advise me what you wish me to do
and also whether or not you agree with me as to the foregoing
proposed terms of settlement.

January 22, 1919

Goorga ]?, Scull, Ksq.,

141 Broadway,

Mow York, M. Y.

20th CEMTURY OPTISCOFK COMPAHY

Doar Soull:

Replying to your favor of tho 21st Instant, wo
should be pleased to have you look after this case on our
behalf.

If you arc ublo to sottle the case as regards \
the Edison Interests, and suoh Individual defendants as were
oonneoted with tho Edison interests, at a total oost of $500
you are hereby authorized to do so.

Very truly yours.

General Counsel,

^n^fo^y,

Mar oh 18, 1919.

Henry lanahan, Esq..,
legal Department,

Orange, M. J.

He - Samollner vs. Patents Company et al.

My dear to. lanahan: -

1 have yours of the 17th instant, and am enclosing
two copies of a memorandum prepared in accordance with your
request.

GPS /A

Yours truly.

neoEivKe e>'^

a*.

Enclosure.

[ENCLOSURE]

Ur. Charles Edison :

i’hlB memorandum io being written you at tho roouont of Hr.
Lanahnn. Somotimo Einoo I told Ur. Lunahnn that all of tfco triple dam¬
age suits, except tho Twentieth Contury Optiacopo, had boon disposed of.
At that timo tho ouit of Snmplinor for triple damages had boon tried
in tho District Court horO in How Yorb, and had rooultod in a verdict
for dofondanto on a opcoial defense which thoy had sot up, to tho of foot
that Samplinor, an attornoy-at-law, could not buy up and prosocato a
npooulativo cult of this character.

This vordict had boon appoalod to tho Court of Appeals horo,
and tho dociolon of t ho lower court affirmed.

At tho timo that I t a Deed to Ur. Lanahnn it had boon as aimed,
apparently without justified on, that tho case would go no further.

Loot wool; papors in an appeal to tho Supremo Court of tho United Staton
wore served by the plaintiff, so that that appeal will have to bo mot
whoa it arises. Thoro is no reanon to believe that tho Sur.romo Court
will advanoo tho hearing so that it probably will not be roaohod for
more than a yoar.

Personally, I have great confidenao in our dofenno, which
has already boon approved by two courts. Tho situation is so out¬
rageous, that a court iB inclined to find in dofondsnts favor if it
possibly can. Tho ovidonoo shows that Samplinor, an attorney at Cleve¬
land who had done come worh for tho liahe Shore Film Exchange, to oh tho
olalm of tint Exchange against tho licensed manufacturers under tho
Sherman Act, in paymont for servicoo valued at not more than $6,000.

[ENCLOSURE]

Mr. Chatties Edison

Ho then brought suit in Ohio against the Genoral Film Company only
for §101,000, and subsequently brought suit in the Southern District
of Hew York for §250,000. The defense also showed that at the time
ho took tho olaim there had been no attempt to ascertain the amount of
alleged damage which had been done to (the Bxohange.

Both courts found that this was a highly speculative iiti-~
gation, and one which the law does not permit an attorney to engage
in*

It is my personal opinion, that this appeal has been filed
in the desperate attempt to get the defendants to pay something so as
to avoid further exponso in connection with the appeal. The decisions
,of both the lower courts have been so strongly in favor of the de¬
fendants, that it appears that Sampling, or rather his attorneys, are
making a desperate attompt in this appeal.

liar. 18, 1919.

y - "Sip-,

'^T4 £3

March 19, 1919

Mr. Charles Edison:-

In my memorandum of Maroh 4th to Mr. Thomas A. Edison,
prepared at your request, I stated that all of the triple damage
suits had been settled up except the Twentieth Century Optisoope
Company case, this being based on information received from Mr.
Scull.

Last week we were advised by Mr. Scull that he had been
served with a notice of appeal to the United States Supreme Court
in the case of Sampliner vs. Motion Picture Patents Company, Thomas
A. Edison, Ino., Prank L. Dyer, et al. I have asked Mr. Scull to
write a brief statement concerning this case, and I am forwarding
the same to you herewith and presume that you will hand it to your
fathe r.

Henry Lanahan

f?«fk3

December 21, 1920

Ur, Thomas A, sai.son.

You will porhapg remember that there Is still pending
one of the Trlplo Damage Suits brought against various defendants
Including Hot Ion Picture Patents Company, Thomas A. Edison, In¬
corporated, and other motion picture manufacturers, for an alleg¬
ed violation of tho Sherman Anti-Trust Aot, ThLs Is the suit
brought by Joseph H. Sompllner, In this oase one of the defenses
was that the acts by whloh Sampllnor obtained his rights as plain¬
tiff constituted champerty, and that the suit could not, therefore,
bo maintained. Tho case was tried upon this single Ibbuo, end
after tho plaintiff had put In his case, the defendants moved for
a dlreoted verdict and the attorney for tho plaintiff also moved
for the dlreotlon of a verdict In his favor, Tho Court thereupon
seems to have- made a finding of fact and dlreoted a verdict for
tho defendants. The case woo appealed to tho Circuit Court of
Appeals who sustained the deolslon of the lower Court and an
appeal was thereupon taken to tho U.S. Supremo Court, A doolslon
has just boon rendered reversing these doolslons, and I hand you
herewith a copy of the oplnLon of the supreme Court, Ab I under¬
stand the. opinion, tho quostlon relates to a teohnloal point of
procedure, and apparently moans that the trial Judge Bhould not
have passed upon a question of faot, but s ho.uld - have :.-p era 1 1 1 e d
it to go to tho jury. The oase has been remanded for farther
proceedings. This means that a new trial Is ordered, and the

part Lea are in preoisely the same poaLtLon aa when they started,
that La, the Dome defenses are open to us as boforo aiid;*th6.:i’te
question of ohamperty oan ho trLed out before a jury.

Your interests Ln this litigation are Ln the hands
of Ur. Robert McCarter, Mr. Scull informs mo that he ana Mr.
McCarter ana Mr. Seabury, who represents other defendants, are
to have a oonferonoo this wook to doolde upon further prooeduro.

Delos Holden

February 15, 1921

Mr. Charles Batson:

iferrLng to the annexed letW/frora Mr. Soull. You

will note that the defendants In the Sampllner suit, which
Include Motion PLoture Patents Company and Thomas A. Edison, Inc. ,
are liable for costs on the appeal to the Supreme Court amounting
to approximately .$775.00. Fortunately, Mr. Soull has already
collected §250.00 each out of some of the other defendants
and nowasts authority Vo contribute one-fifth of the costs on
behalf of the Edison Company up to -§250.00.

This arrangement^ seems to me is fair, and If you will
approve I will give Mr. Sc^ill this authority.

As a matter of fast, the entire amount could be
collected by the plaintiff from any one of the defendants , so
that it is to our advantage ^o have the amount divided up.

oLj~-

Id 52?

Delos, Holden, Esq. ,

Thomas A. Edison, Ino.,

Orange, N. 3.

My dear Holden:

Ee - Sampliner v. Edison at al.

I enoloBe copy of a letter, received this morning from
William Seat-nry. I -know nothing more than v/hat is stated in the
letter. I have been trying to reach Mr. McCarter today, brt find
that he is in Trenton where he will be tomorrow also, and that he has
a case on in Newark on Satvrday. It is possible that he will be in
his office tonight abort five o’clock and I have left word to have
him call me up then. I should have liked to have arranged a con¬
ference with Mr. McCarter and yourself. Unfortunately all of my
evenings of this week are taken up and Monday and Tuesday of next
week I shall probably be in Philadelphia. I really do not believe,
however, that the offer made by the plaintiff is likely to be with¬
drawn.

• I am dropping a letter .to William Seabury stating that-
both Mr. McCarter and myself are tied up and possibly will not be
able to give him an answer until some time next week.

In the meantime, will you think the matter over and
•possibly discuss it with the Edison people to ascertain their attitude.

Delo3 Holden, Esq,

Mar oh. 3, 1921.

Id 6P?

I p»e@rr;

I am sending a oopy of Seabury's letter to Mr.

Yours very truly.

G2S*C

[ENCLOSURE]

Id 62?

WILLIAM MAR3T0H SEABURY
120 Broadway,

Hew York

March 2 ,

1921.

Dear Mr. Soull:-

Judge Seahury had a long conference
today with Mr. Cannon of Cleveland, one of Sampliner’s
counsel , and Hr. GustavuB A. Rogers, at which a possible
settlement of the Sampllner oase was discussed.

As a final offer of settlement Mr.

Cannon and Mr. Rogers offered, subject to withdrawal
without notice,, to accept $30,000 and costs which we
understand not- to exceed $1,000.

I have telegraphed Mr. A. B. Smith,
President of Vitagraph, who is at. present in Los Angeles,
and have told, him that if five defendants are prepared to
• contribute equally to this settlement , I am prepared to
recommend its acceptance. ‘

Will you please advise me immediately
how you feel about it and whether your client wm be
one of five -tV contribute equally to this settlement.

Mr. Cannon is returning to Cleveland
on Friday of this week and Bays he would like an answer
before he goes.

Sincerely yours.

Id 62?

Mr. Thomas A. Edison:

l^Lj

March 9, 1921

I annex hereto a letter aatea March 2, 1921 £rom William
Seabury to Mr. Scull. Mr. Seabury is attorney for the Vitagraph
Company.

I haa a conference this morning with Mr. Robert McCarter
ana Mr. Scull, in order to obtain their .views ana recommendatlop as
to whether or not we shouia agree to the proposea settlement.

The aeoision of the Supreme Court in this suit means that
the aefense of ohamperty, which by stipulation between counsel can
be trie! separately from the main Issues of the suit, is a question
which shouia go to the jury, that is, it shouia be left to the jury
to aecide whether or not Sampllner aoqulrea the claim upon which he
has brought suit with the intention or for the purpose of bringing
suit, or whether he acquired it in a bona fide manner in payment
for services previously rendered to his ollent. If it is deoiaea
to go ahead with the suit, the oase will practically be in Mr. Mo
Carter's hands as the other defendants have intimated that they
would be glad to have him represent all of the defendants. He,
however, stated that Inasmuch as he Ib a Hew Jersey lawyer he
would like to have Hew York counsel associated with him, which
means that Judge Seabury would also be in the oase. The latter
is a heavy oharger and Mr. Scull thinks would charge $2000 for
defending the case, ana that it could hardly be expected that
Mr. McCarter would charge less since her would be the active trial

II) 627

counsel, and the other expenses might he estimated at §1000, making
a total of §5000. This apparently would he the cost of trying out
the oase on the champerty defense alone, to he followed hy another
trial on the merLts If the defendants were unsuccessful. Mr. Scull
feels quite positive that we should win on the champerty defense,
and thinks Mr. McCarter feels that way also. I Btated that I did
not feel like accepting the responsibility of deciding whether or
not we should endeavor to settle hut would present the matter to you
and asked what recommendation Mr. McCarter would make. He replied
that if you were sitting there In his offloe and he were talking to
you In person he would say that If you feel like being a sport and
taking a chance he would advise you to defend the sultl heoause he
did not feel that even If It. should go against you, the judgment
could he much If any more than the amount at which they offer to
settle, that is, §30,000. He also said that If It was a question
of principle with you, not to he held up hy what he considers vir¬
tually a hlack-malllng proposition and you feel that it is a case
of millions for defense hut not one cent for tribute, then he
would also advise you to fight the oase. On the other hand, the
easiest way out of It, that Is, the line of least resistance, if
you. have no feeling In the matter, would be to settle at the
amount named, your share of which, that is, one-fifth, .would he
§6000, plus costs not to exoeed §200.

Mr. Scull stated that when the case was on before and
was either being tried or about to he tried, the plaintiff offer¬
ed to settle for §15,000, and we might endeavor to beat them down

-3-

ID 627

from' $30, 000 to possibly §20,000 now, but even If this were done
It would save the Edison Company only §2000 and we would have to
pay Mr. McCarter for his servloes In carrying on such negotiations
and also prepare for trial If v/e turn down the proposition for
settlement whloh Is now before us because the plaintiff might
refuse to accept any smaller amount.

Will you, therefore, please Indloate what you would like
ito have us do as regards this offer of settlement. I might add
that In oase a judgment should be entered In this suit It Is
probable that It could be divided up among various defendants
under an agreement to contribute. Inasmuch as the suit Is In
the Southern District of Mew York and we have praotloally no
assets In that DLstrlot It Is likely that the plaintiff If It
became necessary to enforce the judgment by execution, would
prooeed against some of the other defendants, but we would pay
our share under that agreement.

Enc.

DH-ES

Delos Holden

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[ATTACHMENT]

Legal Department Records
Motion Pictures - Case Files

United States of America v. Motion Picture Patents Company etal.

This folder contains material pertaining to an antitrust suit brought by the
federal government against the Motion Picture Patents Co. The case was
initiated in 1912 in the U.S. District Court for the Eastern District of
Pennsylvania. It was subsequently appealed to the U.S. Supreme Court. The
selected items include the government's original petition; testimony by Frank
L. Dyer at hearings held in New York City in November 1 91 3; and memoranda
from 1915 briefing Edison on the progress and settlement of the suit.

. AO

iur,U.i

In the District Court of the United States for the
Eastern District of Pennsylvania.

Tnn United States op America, petitioner.

ORIGINAL PETITION

ceoRce w, wickersham,

Attorney Oct

JAMES A. TOWLER,

REPRINE

In the District Court of the United States for the
Eastern Distriet of Pennsylvania.

The United States op America, petitioner,'

Motion Picture Patents Company and
others, defendants.

No. — .

Original Petition.

To the honorable judges of the District Court of the United
States for the Eastern Distriet of Pennsylvania, sitting in
equity:

The United States of America, by John C. Swartley, its
attorney for the eastern district of Pennsylvania, acting under
the direction of the Attorney General, brings this proceeding
in equity against Motion Picture Patents Company, General

Film Company, Biograph Company, Thomas A. Edison -

(Inc.), Essanay Film Manufacturing Company, the Kalem
Company (Inc.), George Kleine, Lubin Manufacturing Com¬
pany, Melies Manufacturing Company, Pathd Frfires, the Selig
Polyscope Company, the Yitagraph Company of America, I
Armat Moving Picture Company, Frank L, Dyer,. Henry N.
Marvin, J. J. Kennedy, William Pelzer, Samuel Long,. J. A. I
Berst, Sicgmund Lubin, Gaston . Melies, Albert E. Smith,
George K. Spoor, and W. N. Selig.

The defendants above-named, engaged in interstate and
foreign commerce in motion pictures, films, cameras, exhibit¬
ing machines and other articles and apparatus used in the
motion picture art, are violating the provisions of the act of

'H*\ ^ ^ n ^ '

ORIGINAL PETITION.

Congress passed July 2, 1800, entitled “An net to protect
trade and commerce against unlawful restraints and monop-
f olies,” and tliis proceeding is instituted to prevent and
/ restrain the hereinafter particularly described agreements,
• ■ contracts, combinations, and conspiracies in restraint of, and
V restraints upon, interstate and foreign trade in such articles,
the attempts to monopolize and the contracts, combinations,
and conspiracies to monopolize, and the existing monopo¬
lizations of part of trade and commerce among the several
States in such commodities.

On information and belief, your petitioner nllcgcs and
shows:

Motion Picture Patents Company is a corporation organ¬
ized under the laws of New Jersey, with its principal offices
at 80 Fifth Avenue, New York City.

General Film Company is a corporation organized under
the laws of the State of Maine, with its principal offices at 200
Fifth Avenue, New York City.

Thomas A. Edison (Inc.) is a New Jersey corporation,
the successor to all the rights and privileges of the Edison
Manufacturing Company, also a New Jersey corporation.
The principal offices of Thomas A. Edison (Inc.) are located
at Orange, N.. J.

Biograph Company is a corporation organized under
the laws of New Jersey, with its principal offices in New
York City.

Essanay Film Manufacturing Company is a corporation
organized under the laws of the State of Illinois, with its
principal offices at Chicago, Ill.

Kalem Company (Inc.) is a corporation organized under
the laws of the State of New York, with its principal offices
at New York.

Lubin Manufacturing Company is a corporation organized
under the laws of the State of Pennsylvania, with its prin¬
cipal offices at Philadelphia.

Mclics Manufacturing Company is a corporation organ¬
ized under the laws of the State of New York, with its
principal offices at New York City.

Pathd Friires is a corporation organized under the laws
of the State of New Jersey, with its principal offices at New
York City.

Selig Polyscope Compnny is a corporation organized
under the laws of the State of Illinois, with its principal
offices at Chicago.

Vitagrapli Company of America is a corporation organ¬
ized under the laws of the State of New York, with its
principal offices at Brooklyn, New York.

Armat Moving Picture Compnny is a corporation organ¬
ized under the laws of West Virginia, with offices in the
city of Washington, D. C.

Said defendants will bo hereinafter referred to as “corpo¬
ration defendants” and “defendants.”

The individuals made defendants herein and hereinafter
called “individual defendants” and “defendants” have
been and now are officers and directors of the corporation
defendants as hereinafter Btated, and asj supli officers and
directors have participated and do now participate in the
management and direction of the business of the corporation
defendants, and have been and are now responsible therefor.

Frank L. Dyer lias been since its organization president
and a director of Motion Picture Patents Company and a
director of General Film Company since the incoiporation
of the latter company. He is president of Thomas A.
Edison (Inc.) and was president or vice president of its prede¬
cessor, Edison Manufacturing Company, during the period
hereinafter mentioned.

4 OBIGINAL PETITION.

Henry N. Marvin lias been since its organization and is
now vice president and a director of Motion Picture Patents
Company. He is vice president of the Biograpli Company,
and held that office during the period hereinafter mentioned.

J. J. Kennedy has been since its organization and is now
treasurer and a director of Motion Picture Patents Company,
and president and a director of the General Film Company
since the incorporation of the latter company. He is also
president of the Biograph Company and held that office
during the period hereinafter mentioned.

7 William Pelzer has been for several years, and is now,
j secretary and a director of the Motion Picture Patents Com¬
pany, and secretary of the General Film Company since the
incorporation of the latter company. He is also an officer
of Thomas A. Edison (Inc.) and held that office during the
period hereinafter mentioned.

Samuel Long is now and has been since its incorporation
' treasurer and a director of tbe General Film Company. He
. is president and a director of Kalem Company and held that
office during the period hereinafter mentioned.

J. A. Berst is now, and has been since its incorporation, a
director of the General Film Company. He is one of the
officers of and interested in Pathfi Frhres and held that
office during the period hereinafter mentioned.

Siegmund Lubinis now, and has been since its incorpora¬
tion, a director of the General Film Company, and he is
president and a director of the Lubin Manufacturing Com¬
pany and held that office during. the period hereinafter
mentioned.'

Albert E. Smith is now, and has been since its incorpora¬
tion, a director of the General Film Company. He is
president and a director of Vitagraph Company of America
and held that office during the period hereinafter mentioned.

George K. Spoor is now, and has been since its incorpora¬
tion, a director of the General Film Company. He is
president and a director of Essanay Film Manufacturing
Company and held that office during tbe period hereinafter
mentioned.

W. N. Selig is now, and lias been since its incorporation,
a director of the General Film Company, and he is president,
a director, and stockholder of the Selig Polyscope Company,
and held that office during the period hereinafter mentioned.

George Itleine is an individual residing in Chicago, III.,
doing business in his own name. He has been vice presi¬
dent and a director of General Film Company since its
incorporation.

Gaston Melies is now, and has been since its incorporation,
a director of the General Film Company, and he is also
president of Melies Manufacturing Company, having held
that office since its incorporation.

The object of this suit is to remove tbe restraints which
defendants herein have imposed upon trade and commerce in
machines; appliances^ and apparatus relating to the motion-
picture art and upon persons engaged in such trade and
commerce.

A moving picture or a picture of an object in motion
in reality consists of a long series of consecutive snap shots;
or instantaneous pictures, taken one after the other of the
object the movement of which it is desired to portray.
These pictures are recorded nt such brief intervals, 16 per
second, that in any two consecutive pictures there is no
perceptible change in the position of the object which is in
motion.. The result is that when, the series of pictures is
thrown rapidly upon a screen by means of a projecting
machine the illusion of movement is produced. The eye in

o ORIGINAL PETITION.

reality looks upon a swift succession of instantaneous plioto-
graplis but is deceived into belicviiig that it is seeing actual
movement.

Persons engaged in trade and commerce in these appliances
may be divided into three classes: (1) Manufacturers of mov¬
ing picture cameras, films, and projecting or exhibiting ma¬
chines; (2) rental exchanges doing a wholesale or jobbing
business in distributing these machines and films to the
exhibitors; (3) exhibitors of pictures or theatre owners.

With the development of the motion-picture business, in
the last 20 years, numerous patents relating to the motion-
picture art have been issued by the United States. Some of
these patents have related to the mechanism of moving pic¬
ture cameras or have been patents for improvements in said
mechanism; many patents have been issued relating to pro¬
jecting or exhibiting machines and many more for improve¬
ments in said machines. Some of these patents have been
sustained by the courts while some have been held invalid
either by reason of their infringing other pntents or because
they related to matters not properly patentable.

Many important factors, besides the character of the
camera and projector, enter into the production of a good
motion picture. The quality and composition of the sensi¬
tized, translucent strip of celluloid film used in the camera,
known as the negative film; the perforating of the negative
film with mathematical precision before it is placed in the
camera and exposed; the developing of the negative, the
developing and printing of the positive film from the negative
are all important elements to the perfection of which years
of constant experimenting and unremitting research have
been devoted.

Of all commerce relating to the motion-picture art the
commerce in positive motion-picture films is by far the most
considerable. Between two and one-half and three million feet
of pictures are printed every week by the manufacturers and

ORIGINAL PETITION, 7

distributed to thousands of exhibitors all over the United
States. The patrons of these theatres generally demand a
daily change of the entire picture program, and therefore it
is essential to every exhibitor that the source of supply of
pictures bo at all times open and unrestrained.

Within the last ten years the moving-picture business has
reached enormous proportions. It is probably true that a
sum greatly in excess of §100,000,000 has been invested in
the different branches of the business.

In the year 1908 and prior thereto there were ten manu¬
facturers or importers of moving pictures in the United
States; that is to say, there were that number of companies
which were producing or importing reels of motion pictures
and selling and shipping them to exchanges scattered
throughout the United States, the latter in turn distributing
to exhibitors all over the country. There were at that time
some 125 to 150 rental exchanges, and 6,000 or more ex¬
hibitors in the United States.

In this commerce in positive films or moving pictures, the
manufacturers at that time competed with each other for
the business of the exchanges, and all the exchanges com¬
peted for the business of the exhibitor. There were also a
number of manufacturers of cameras and of projecting
machines competing with each other.

The ten manufacturers of films and their respective
places of business from which they sold and shipped as afore¬
said were the following:

American Mutoscope and Biograph Company, New York
City, a New Jersey corporation, now known ns the Biograpli
Company.

Edison Manufacturing Company, Orange, N. J., a New
Jersey corporation, predecessor of Thomas A. Edison (Inc.).

Essanay Film Manufacturing Company, Chicago, an Illinois
corporation.

66498-12 - 2

ORIGINAL

Kalem Company, New York City, a New York corpora-

Georgo ICIeino, Chicago, a large importer of films, repre¬
senting nine foreign companies.

Lubin Manufacturing Company, Philadelphia, Pa., a
Pennsylvania corporation.

George Melies Manufacturing Company, Chicago, Ill., an
Illinois corporation, an important importer of foreign films,
and also a producer of American films.

Pathfi Frftres, New York City (factory, Bound Brook,
N. J.), a New Jersey corporation, an importer of films and
an important producer of domestic films.

Selig Polyscope Company, Chicago, an Illinois corpora¬
tion.

Yitagraph Company of America, Brooklyn,- N. Y., a New
York corporation.

All these producers of positive moving-picture films were
engaged in shipping and distributing their films throughout
the United States to the rental exchanges of which, as stated
above, there were between 125 and 150 in the country. These
rental exchanges, in turn, distributed the films to the thou¬
sands of exhibitors, and in so doing were engaged in interstate
commerce, as practically every rental exchange had many
customers located in other States than the State in which the
rental exchange was situated.

At the time mentioned, and prior thereto, keen competi¬
tion existed in the motion-picture business and commerce
relating thereto. A theater owner or exhibitor was able to
buy a projecting machine from the Biograph Company, the
Armat Company or other manufacturers, and exhibit, thereon
the moving pictures of any manufacturer. He could buy for¬
eign films imported by said Kleine or George Melies Com¬
pany, or American films from any one, or from all of the
manufacturers of films above named. Interstate and foreign

commerce in films, moving picture cameras, projectors and
other appliances relating to the art was unrestrained by any
combination of manufacturers. At that time films were
not leased but sold by the manufacturers to the rental
exchanges. The latter in turn leased but did not sell them
to the exhibitors.

In the year 1908 the defendants determined to destroy
rnmnetirion between them, to monopolize commerce relating
to the motion-picture 'aninigere-

after to carry on said commerce according to the terms of
the unlawful combination which they were to create. Briefly
stated, the combination was to take the following form :
Defendants were to organize a company which should do no I
business and hold no property other than certain letters S
patent which were to be transferred to it by the defendants
and others. This company was to acquire all patents owned j
by defendants and all other patents relating to the motion-
picture art.

Each of the 10 manufacturers was to take from this new
Patents Company a license to produce and lease motion- pic¬
tures. These license agreements were to be all alike and their
terms were to be arrived at by agreement of all defendants
before the patents were assigned by them to the new com¬
pany. In the license agreements were to be incorporated
conditions and restrictions not authorized by the patent
laws and regulating the conduct of the business of the
manufacturers in every detail. Under these agreements
they were all to do business in exactly the same manner.
They were to lease films and no longer sell them ; they were
to lease at uniform and noncompetitive prices and only to
such rental exchanges ns should obtain a license from the

ORIGINAL PETITION.

new Patents Company and should agree to handle only de¬
fendants’ films and to sublease only to exhibitors licensed
by the Patents Company. No exhibitor was to be furnished
films who did not agree not to display films of any manu¬
facturer other than defendants and not to use projecting
machines not licensed by the Patents Company. Defend¬
ants intended by virtue of these agreements to acquire the
power to determine who should engage in business as a
producer of films and who should be excluded from that
business, who should continue to operate a rental exchange
and whose rental-exchange business should be destroyed,
who should remain an exhibitor and who should close his
theater, who should in the future open a new motion-pic¬
ture theater and who should be barred from so doing.
The intent of defendants in forming the new company_an£L
in_entcring into the license agreements was to control, re¬
strain, and monopolize all branches of commerce among the
States of the United States and with foreign nations relating
to the motion-picture art, and to exclude others therefrom.

Accordingly, with the unlawful purposes just mentioned,
the defendants, acting together, incorporated nnder the laws
of New Jersey, September 8, 1908, Motion Picture Patents
Company (hereinafter called the “Patents Company”), with
.a capital stock of $100,000.

The articles of incorporation declare the purposes of Motion
Picture Patents Company as follows :

The objects for which this corporation is formed
are to acquire by purchase, lease, payment of royal¬
ties or otherwise, letters patent, inventions and im¬
provements in materials, processes and apparatus
relating to the production of negatives and positives
for motion pictures, and also relating to the photo¬
graphing, developing, reproducing, projecting, and
exhibiting of scenes and objects nt rest and in motion;

to mortgage, sell, lease, dispose of by agreement or
otherwise, such letters patent, licenses under letters
patent, and improvements, and to license others to
use the inventions covered by the snid letters patent
and to use such improvements; to purchase, hold, sell
and convey such real and personal property as shall be
lawful and adapted to the requirements of the business
of the company.

The certificate of incorporation of the Motion Picture Pat¬
ents Company, hereinafter called the Patents Company, is
attached hereto as a part of this petition marked Exhibit 1.

On December 18, 1908, at a meeting in New York City
attended by all the individual defendants, and all the corpora¬
tion defendants being represented except the Melies Manufac¬
turing Co., defendants, with the unlawful purposes above men- j
tioned, executed (a) preliminary agreements for the assignment
of the patents to the Patents Company, and (6) nine license |
agreements with the Patents Company, one being concluded
by each of the manufacturers (except Melies Co., which signed
a similar agreement on a later day) with the Patents Com¬
pany. The terms of all these agreements had been arranged
beforehand at numerous conferences between the manu¬
facturers.

On the same day, according to their previous agreement,
defendants elected the following officers and directors of the
Patents Company :

President, Frank L. Dyer, also vice president of Edison')
Manufacturing Company. '

Vice president, H. N. Marvin, also vice president of Bio¬
graph Company.

Treasurer, J. J. Kennedy, also president of Biograph
Company.

Secretary, George T. Scull, an nttorney of the Edison
Manufacturing Company. .

Those officers have at all times since its incorporation
constituted the entire hoard of directors of the Patents
Company, except that William Pelzer, an officer of Thomas
A. Edison (Inc.), has been for some time past and is now
secretary and director in place of George F. Scull.

All of the stock of the Patents Company, except the four
qualifying shares held by the four directors, has been owned
ever since its organization, one-lialf by the Edison Manu¬
facturing Company and its successor, Thomas A. Edison
(Inc.), and the other half by the Biograph Company, as
provided in the preliminary agreements for the assignment
of the patents to be next described.

IV.

Preliminary Agreements for tlie Assignment
of the Patents.

There were four of these agreements, all executed as above
stnted, December 18, 1908, each agreement being entered
into by one of the following companies with the Patents
Company:

' 1. Edison Manufacturing Company,

2. Biograph Company,

3. Armat Moving Picture Machine Company, and

4. Vitagraph Company of America.

These agreements are identical as to all the essential
features. A copy of the Edison agreement, dated December
18, 1908, is attached hereto as a part of this petition and
marked Exhibit 2.

After reciting that the Edison Company owns Reissues
letters Patent Nos. 12037 and 12192 and that the Edison
Company desires to acquire $50,000 of the $100,000 author¬
ized capital stock of the Patents Company, in consideration
of the assignment of the patents last named, and after
further reciting that the Patents Company has acquired or

will acquire certain patents (naming them) from the Vita- \
graph Company of America, Biograph Company, and the \
Armat Company, and that the Patents Company contem- \
plates deriving royalties of three kinds (1) from manufac- \
hirers of projecting machines licensed under the patents by
the Patents Company (machine royalties), (2) from exhib¬
itors, for the use of projecting machines licensed under the
patents by the Patents Company (exhibitors’ royalties), and
(3) from manufacturers and importers of motion-picture
films licensed under Reissues 12037 and 12192 above named
(film royalties), the Edison preliminary agreement provides:

(1) The Edison Company agrees to assign reissue patents I

12037' and 12192 and the right to sue for past infringement,
and the Patents Company agrees to issue 500 shares of
stock aggregating $50,000. (Paragraphs 9 and 10.) J

(2) TlieJMisgnjCompany agrees not to ..pledge,, sell, qr_ I

dispose of its capital stocirir'jhe_Pat.ents_CQmpany, and to j
deposit its certificates with a trust company, to he named j

by the Patents Company, as trustee, and to instruct the j

said trustee not to release, transfer, or return the said cer-
tificates so deposited without the consent of the Biograpli j
and Armat Companies. (Paragraph 14.) 1

(3) After deducting: from, the machine royalties a royalty j

of $1 a machine; to be paid the Vitagraph Company, and ) j
after deducting from the gross exhibitors’ royalties 24 per L j
cent for_nnvment to the licensed manufacturers and importers ( !
of motion pictures other thnn the Biograph and Edison Com- J
panics, and after deducting the expenses, the balance is to J
Iw divided ns follows : ■' /

(а) To the Edison Company shall he assigned and1 paid an
amount efinnl to1 the net film royalties.

(б) The remainder up- to an amount equal to the net .film
royalties, shall be assigned- and paid1 to the: Biograpli Com-/ j
pony and the Armat Company, respectively, in. the proportion/

■ “i, ^

X* w« i- ^ V^T -

I , .P „ . L. lL0 WwA l/l.

14 oiiigiNal petition.

of two-tliii'ds to die Biograph Company and one-third to the
Armat Company.

(c) If any balance remains after the foregoing payments,
it shall be divided and paid to the Edison Company, the
Biograph' Company, and the Armat Company in the propor¬
tion of one-half to the Edison Company, one-third to the
Biograph Company, and one-sixth to the Armat Company.
(Paragraph 12.)

(4) Provision is made for the continuation of the agreement
beyond August, 1914, the date of the expiration of the patents
which the Edison Company assigns, for it is provided that
on August 13, 1915, one year after the expiration of the
patents, and at the end of each year thereafter, the Patents
Company shall pay to the trustee who holds its certificates of
stock all of its net profits for the preceding year, consisting
of net machine royalties, net exhibitors’ royalties, and “the
net sum of any royalties which the Patents Company may
collect in lieu of the present film royalties” as a dividend
upon the capital stock of the Patents Company, and will in¬
struct the trustee to divide the said dividends and to pay to
the Edison Company therefrom an amount equal to one-half
of such dividend. (Paragraph 13.)

(5) The agreement may be terminated —

(o) For wilful and continued breach of its terms by either
of the parties.

(6) If the Patents Company becomes bankrupt or ceases
doing business.

(o) If the Patents Company is dissolved voluntarily or
otherwise.

(d) If its charter is repealed.

Upon termination of the agreement for any of the fore¬
going causes, all the right in Patents 12037 and 12192 shall
ybe reassigned to the Edison Company by the Patents Com-
sVpany. (Paragraph 15.)

OHIO INAL PETITION. 15

The preliminary agreement of the Biograpli Company
with the Patents Company is identical with that executed
by the Edison Company, except that it provides for the
assignment of different patents, and also provides that the
Biograph Company shall retain the right (without the pay¬
ment of any royalty to the Patents Company), to practice
the inventions described in the patents which it assigns.
This agreement, like the Edison agreement, stipulates that
upon its termination the Patents Company shall reassign the
patents to the Biograpli Company.

The Armat agreement is similar except that the Armat
Company receives no stock in the Patents Company as a con¬
sideration for the transfer of its patents. Like the others
it contains a provision for a continuance of the arrange¬
ment beyond 1914, and for a reassignment of the patents
by the Patents Company to the Armat Company if the
agreement is terminated for any of the reasons above stated.

In the Vitagraph agreement the Vitagraph Company
agrees to assign six patents and the right to sue for past
infringement, but it reserves the right to practice the
inventions described in said patents without the payment
of any royalty to the Patents Company. The Patents
Company agrees that it will not grant any license to manu¬
facture exhibiting or projecting machines under any
patents owned by it and covering such machines unless
such licensee shall also accept a license to manufacture and
sell exhibiting and projecting machines under the Vita-
graph patents whether or not such licensee may thereafter
make use of any of the inventions covered by said Vita-
graph patents. The Patents Company agrees to pay a
royalty of ?! on each machine containing the inventions
described in one or more of the Vitagraph patents, a royalty
of ?1 when the machine is cnpable of exhibiting by trans¬
mitted light, and a royalty on other kinds of machines.

65498—12 - 8

ORIGINAL PETITION.

ORIGINA

It is provided that tlxe agreement shall continue until
the expiration of all the Yitagraph patents. Upon the
termination of the agreement for any of the causes named,
the Patents Company shall reassign the patents to the
Yitagraph Company.

The Manufacturers’ license Agreements En¬
tered Into With the Motion Picture Pat¬
ents Company.

tially identical with the eight other license agreements exe¬
cuted the same day, provides, in brief :

1. The licensee — that is, the manufacturer of the motion-
picture film — is licensed to lease the film only on condition
that it be used in exhibiting or projecting machines licensed
by the licensor.

2. The licensee agrees that he will use exclusively sen¬
sitized film manufactured by a manufacturer authorized by
the licensor, and that he will buy all his film from that manu¬
facturer. (Sec. 4.) This refers to the Eastman Kodak
Company.

3. The licensor agrees that he will obligate such manu-

On the same day, December 18, 1908, with the unlawful
purposes above mentioned, each of the ten manufacturers
named on pages 7-8, supra (except the Melics Company,
whose president joined later and formed another company),
hereinafter called Patents Company, licensees, concluded
with the Motion Picture Patents Company a license
agreement, each license being practically identical with
every other license. The terms of these license agree¬
ments had been determined at numerous earlier confer¬
ences between defendants. Each agreement regulated in
every detail the manner in which the manufacturer should
do business, which was to he the same for all the manu-
\ facturers. Each agreement licensed^ the manufacturer
to manufacture and use' movingpifliuie cameras embody¬
ing the invention^ "Of the "patents and to “manufacture,
print, '"and proaucrpositl’re~motion pictures embodying the
inventions of said reissued Letters Patent No. 12192 and to
lease the same in the United States * * These

agreements were licenses under the camera and film patents
and are to be distinguished from the licenses to the manu¬
facturers of exhibiting machines to be later described.

A copy of the license agreement dated December 18, 1908,
between the Motion Picture Patents Company and the
American Mutoscope & Biograpli Company, now named
the Biograph Company, is attached hereto as a part of this
petition, marked “Exhibit 3.” This agreement, substan-

facturer not to sell sensitized film to anyone but the licensees,
except a small per cent, which may be supplied by the
manufacturer to persons who do not make motion pictures
of the standard size. (Sec. 4.)

4. The licensee agrees to pay certain royalties on the film
to the licensor. (Sec. 4.) This amounts to approximately
half a cent per foot, subject to reductions in proportion to
sales. These royalties are called the “film royalties.”

5. The Patents Company agrees to collect royalties of ?2
a week from all exhibitors using motion-picture projecting
machines embodying the inventions described in the letters
patent which were to be assigned to. the Patents Company.
(Sec. 4.) This provision is to apply regardless of the fact that
those machines had already been sold with no condition
attached and bad become the property of the exhibitor. The
royalty was to be paid on all machines already on the market.
These are called the “exhibitors’ royalties.”

6. The licensee agrees not to sell any motion-picture film,
but only to lease or rent the same to licensed exchanges and
in accordance with the terms of the exchange license agree¬
ment hereafter described. This was a radical departure from

ORIGINAL PETITION.

the trade custom; previously manufacturers liad sold films
outright and had not leased them.

7. The liceusee agrees not to lease or dispose of motion pic¬
tures to anyone dealing in motion pictures which are not
the output of one of the licensees. (Sec. 6.)

8. The licensee agrees to mark conspicuously on labels
which shall be placed on all boxes containing positive motion
pictures the conditions under which the motion pictures are
leased, among others that (a) the lessee, i. c., the rental
exchange, shall not sell but sliall only have the right to sublet
such motion picture; (6) the lessee shall permit such motion
pictures to be exhibited only on motion picture projecting
machines licensed by the Motion Picture Patents Company
and on no other machines; (c) the lessee shall not sublet such
motion picture at a lower subrental price than that agreed
upon (if any) in the contract of lease between the lessee nnd
lessor; {d) a violation of any of the conditions shall entitle
the lessor, i. e., the manufacturer, to immediate possession of
the motion picture. (Sec. 7.)

9. The agreement fixes a scale of minimum prices for the
lease of positive pictures by the manufacturers to the rental
exchanges, and also provides :

The licensor and licensee further mutually covenant
nnd agree that the above scale of minimum prices is
to remain in force until a new: scale of prices is adopted,
each such new scale to be adopted during the contin¬
uance of this agreement by a majority vote, to be
forthwith communicated to the licensor, of the licensee
nnd the several additional licensees hereinafter pro¬
vided for, or such of them as may at the time be
licensees, on the basis of one vote' for each 1,000
running feet of new subjects. (Sec. 9.)

10. The licensee agrees not to lease motion pictures either
directly or indirectly at lower prices than those fixed and
provided for in the agreement. (Sec. 13.)

11. It is agreed that the subleasing prices for the sub¬
leasing of pictures shall be fixed by a majority vote of the
licensees. (Sec. 17.)

12. The licensee agrees not to dispose of positive
motion pictures except by lease, as above described, or by
sale for export only, and also to refrain from supplying
motion pictures for use with any exhibiting or projecting
machine, the license for which has been terminated by the
licensor, nnd also to refrain from supplying motion pictures
to any lessee who may sublet such motion pictures to persons
using the same for giving exhibitions thereof on exhibiting
machines not licensed by the licensor or the license for which
has been terminated. (Sec. 18.)

13. The parties agree that no person other than the nine
hereinbefore referred to shall obtain a license except by a
majority vote of the licensees, on the basis of one vote for
each thousand running feet of new subjects. (Sec. 20.)

14. The licensor agrees that it will issue licenses to make
and sell exhibiting or projecting machines containing the
inventions described in the letters patent assigned, but that
it will not license any person except upon the condition that
the sale and purchase of such machine gives only the right
to use it solely for exhibiting motion pictures leased by a
licensee of the licensor. (Sec. 20.)

15. The licensor agrees to charge a royalty of §5.00 on
every such machine. These are called the “machine royal¬
ties.”

16. The licensor agrees to license the licensee to make
and sell exhibiting machines. (Sec. 20.)

17. It is provided that the licensee may renew this agree¬
ment by giving notice to the licensor before April 20, of
each year until August, 1919, the date of the expiration of
the Letters Patent 707934, known ns the Latlmm “loop”
patent. (Sec. 21.) This is a patent relating to part of the
mechanism of the camera nnd projector.

ORIGINAL PETITION.

As previously stated, the Patents Company entered into
substantially the same agreement with each of the nine
manufacturers. George Kleine, one of the nine, but an
importer and not a manufacturer, was licensed to import
positive films, but the amount he was allowed to import
was limited to 3,000 running feet of new subjects per week,
and he agreed to confine his purchases to two foreign
manufacturers, Gaumont and Urban. Prior to this license
arrangement Kleine had imported the films of nine or ten
foreign manufacturers and amounts largely in excess of
3,000 feet per week.

A few months later the Patents Company, by agreement
of tbe nine manufacturers, voting as provided in paragraph
13 supra (section 20 of the license agreement) licensed
defendants Gaston and George Melies to import not to ex¬
ceed 1,000 feet of new subjects per week made in Prance
by George Melies. Said two individual defendants are now
doing business in the name of the Melies Manufacturing Co.,
corporation defendant, which company has the benefit of
the license granted Messrs. Melies.

VI.

The Rental Exchange Agreements.

As stated above (supra p. IT, par. 0) the manufacturers’
license agreement requires the manufacturer to lease film
to rental exchanges in accordance with the terms of an
exchange license agreement. In other words, the manufac¬
turers, on December 18, 1908, adopted, and thereafter used,
a uniform contract in the distribution of films to the rental
exchanges. No company would thereafter lease or consign
films to any rental exchange which had not signed one of
these so-called license agreements with the Patents Com¬
pany; furthermore, every rental exchange was not afforded

an opportunity to enter into such an agreement, for the
defendants, acting through the Patents Company, refused
licenses to a large number of the rental exchanges. Most
of these were driven out of business. To about one hun¬
dred of the rental exchanges the Patents Company granted
licenses. Under the terms of these agreements the Patents
Company reserves the right to terminate the license at any
time without cause on fourteen days notice by it, and to
cancel the agreement at once on breach of any of its
terms by the rental exchange. After such termination of
an agreement the exchange can not obtain films from any
of the licensed manufacturers. These agreements de¬
stroyed all competition between the rental exchanges for
they prescribed the manner in which the exchange should do
business, which was made the same for all exchanges. There¬
after the defendants, acting through the Patents Company,
prevented the exchanges from competing with each other
for the business of tbe exhibitors by prohibiting any two
exchanges from serving the same exhibitor.

A copy of the exchange license agreement between' the
Patents Company and the rental exchange is attached hereto
as a part of this petition, marked “Exhibit 4.”

After enumerating the patents owned by the Patents
Company, and reciting that the Patents Company has
licensed nine manufacturers, naming them, tc manufacture
or import motion pictures,, and to lease licensed motion
pictures for use on. projecting machines licensed . by the
licensor, the Motion Picture Patents Company, licenses the
rental exchange under reissued letters Patent 12192; the
film patent, to lease licensed motion pictures! from the
licensed manufacturers' and importers, and to sublet- said
licensed motion pictures for use only on projecting machines
licensed by the licensor under . letters patent owned by it.

OBIGINAL PETITION.

ORIGINAL PETITION.

The licensee, i. e., the rental exchange, agrees as follows:

(1) Not to buy, lease, or otherwise obtain any motion
pictures other than licensed motion pictures, and to dispose
of motion pictures only by subleasing under the conditions
set forth in the contract. (Condition 1.)

(2) The ownership of each licensed motion picture is to
remain in the licensed manufacturer. (Condition 2.)

(3) The licensee shall not sell or exhibit licensed motion
pictures, but shall only sublet the same, and only to exhibi¬
tors who shall exclusively exhibit licensed motion pictures.
(Condition 3.)

(4) The licensee shall not sell, rent, or otherwise dispose of
any licensed motion pictures to any person engaged in selling
or renting motion picture films. (Condition G.)

(5) The licensee shall not sell or dispose of motion pictures
to any person in the exhibition business who may have vio¬
lated any of the conditions imposed by the licensor through
any of its licensees and of which violation the licensee may
have had notice. (Condition 10.)

(6) The licensee shall not sublet licensed motion pictures
to any exhibitor unless a contract with said exhibitor satis¬
factory in form to the licensor, i. e., the Patents Company, is
first executed, and unless each motion picture projecting
machine on which the licensed motion pictures are to be used
by such exhibitor is regularly licensed by the Motion Picture
Patents Company and the license fees therefor have been
paid. (Conditions li and 12.) The license fee is ?2 a week
on every projector owned by the exhibitor.

(7) The licensee or rental exchange is required to mail to
the Patents Company a list, giving the name of each exhibitor
supplied with pictures by the rental exchange. (Condition
12.) The rental exchanges thereafter were not allowed to
supply the same exhibitors; the latter were apportioned
among the licensed exchanges. This paragraph (No. 12) in
effect prevents the rental exchanges from subleasing pictures

to a new exhibitor until that exhibitor has received the
approval of the Patents Company; by it the latter company
is enabled to determine who shall become an exhibitor.

(8) The licensor agrees that before licensing any person
in the United States to lease licensed motion pictures from
licensed manufacturers, i. e., to be a rental exchange, it will
exact from each such licensee an agreement similar in terms
to the present agreement. (Condition 1G.)

(9) The licensor may terminate the agreement on fourteen
days’ written notice to the licensee of its intention so to do,
or immediately upon breach of any of its conditions. (Con¬
dition ID.)

(10) The terms and conditions of the license may be
changed at the option of the licensor upon fourteen days’
written notice to the licensee. (Condition 20.)

(11) The licensee shall return to each licensed manufac¬
turer on the first day of every month, commencing seven
months from the first day of the month on which the agree¬
ment is executed, an amount of positive motion picture film
in running feet equivalent to that obtained the seventh
preceding month. (Condition 9.)

(12) The leasing prices are stated in the agreement.
(Condition 20.) These become the same for every rental ex¬
change in the United States.

The effect of these rental exchange agreements was to
place all the rental exchanges at the mercy of defendants and
the Patents Company. This company would not allow
exhibitors to lease from different exchanges, blit required
each exhibitor to obtain his entire supply of films from one
exchange. In this respect competition between rental ex¬
changes was eliminated. Each rental exchange paid the
same for his films as every other exchange. To-day each
of the ten Patents Company, licensees, leases its films at the
same prices and on the same terms ns the other nine licensees.

65498—12 - 4

ORIGINAL PETITION.

2i ORIGINAL PETITION.

VII.

Licensed Exhibitors.

After January 1, 1909, the defendants commenced to do
business in accordance with the terms of the unlawful com¬
bination which they had formed and in which they are now
engaged, and thereafter not one of the thousands of theater
owners or exhibitors in the United States could obtain for
exhibition purposes a motion picture manufactured by any
of the ten manufacturers, comprising all the manufactur¬
ers and importers at that time doing business in the United
States, unless the Patent Company recognized him and gave
his name as a licensed exhibitor to the licensed exchanges.
In order to secure a license, the exhibitor has to obligate
himself to' use upon his machines only pictures manu¬
factured by the licensed manufacturers. The exhibitor has
to pay oh every exhibiting- machine owned by him ?2 a week
to the Patents Company; this so-called exhibitor’s royalty
applies to machines sold years before to the exhibitor
without any conditions being attached to the sale. No two
exchanges are permitted to serve the same exhibitor during
the same period. Breach by a rental exchange or by an
exhibitor of any of the conditions imposed by the defendants
through the Patents Company subjects such rental exchange
or exhibitor to an immediate cancellation of his license. The
power and monopoly of the defendants became absolute. De¬
fendants, through the Patents Company, were enabled to and
did determine whether new motion picture theatres should or
should not be opened and whether old ones should be closed,
although defendants had no proprietary interest in Buck thea¬
ters. This power defendants have exercised and continue to
exercise arbitrarily and unreasonably through the Patents
• Company. Whenever the Patents Company cancels the
license of a rental exchange it sends notice thereof to all the

customers of such exchange, and likewise when it cancels
the license of an exhibitor notice is sent to the rental
exchanges. Thereafter neither such rental exchange nor
exhibitor can obtain anywhere in the United States the
product of any of the ten manufacturers defendants herein.

All the oppressive restrictions and unlawful conditions
contained in the agreements and pointed out in the preced¬
ing paragraphs of this petition, and to be noted in the para¬
graphs to follow, defendants have observed and enforced at
all times since they engaged in their unlawful combination,
and they will continue to enforce said unreasonable and
oppressive restraints and conditions unless restrained by
this honorable court.

VIII.

license Agreements With Manufacturers -of
Exhibiting Machines.

Defendants on December 18, 1908, not only by- means of
the Patents Company and the so-called license agreements
bound together all manufacturers of moving-picture cameras
and films into one combination, but also with the some un¬
lawful purpose, and as a further means to monopolize trade,
devised license agreements i between , the Patents • Company
and each manufacturer of -projecting or exhibiting machines.
The license agreements of December 18, • 1908, recite that
the parties are intending to conclude other agreements relat¬
ing to projecting machines. ( Supra, p. 19.) The agreements
between the Patents Company and projecting , machine manu¬
facturers contain many of .the restrictive provisions incor¬
porated in the license agreements under the' camera- and film
patents 'referred to above. (Supra, pp.' 1G to 19.) Among
other things, these agreements -provide that every: exhibiting
machine shall be sold subject to the condition that it. shall
be used solely for exhibiting motion pictures containing the

ORIGINAL PETITION'.

ORIGINAL PETITION.

invention of the reissued patent 12192; that is to say, every
machine is to be sold subject to the condition that it shall
he used only with films supplied by one of the ten licensed
manufacturers.

These agreements also fix the prices at which all pro¬
jecting machines are to be sold; these prices are made the
same for all— that is to say, all competition in interstate
commerce between the various manufacturers of projecting
machines as to the prices and terms of sale of their respective
machines is destroyed by establishing uniform prices. The
agreements provide that the manufacturer shall pay the
Patents Company a royalty of ?5 on every machine, called
“machine royalties.”

The Patents Company, acting under the direction and
domination and in the interest of defendants, early in
1909 concluded license agreements of the character indicated
with all the companies at that time manufacturing and sell¬
ing projecting machines in the United States, to wit:

American Mutoscope and Biograph Co., Apr. 20,
1909.

American Moving Picture Machine Company, Fob.
13, 1909.

Armat Moving Picture Co., Jan. 7, 1909.

Edengraff Mfg. Co., Jan. 7, 1909.

Edison Mfg. Co., Jan. 7, 1909.

Enterprise Optical Mfg. Co., Jan. 7, 1909.

Lubin Mfg. Co., Jan. 7, 1909.

Nicholas Power, Jan. 7, 1909.

Eberliard Schneider, Jan. 7, 1909.

Selig Polyscope Co., Jan. 7, 1909.

Spoor & Co., Jan. 7, 1909.

Vitagraph Co. of America, Jan. 7, 1909.

The companies just named, located in different States,
were selling and shipping projecting and exhibiting machines
in interstate commerce throughout the United States.

A copy of the license agreement under the exhibiting-
machine patents between the Motion Picture Patents Com¬
pany and the Armat Moving Picture Company is attached
hereto as a part of this petition marked “Exliibii 5.” This
agreement is similar to those issued to the other companies
named above.

IX.

General Film Company.

As has been pointed out above (supra, p. C), persons
engaged in the motion-picture business belong to one of
three classes: (1) Manufacturers of cameras, films, and other
appliances relating to the motion-picture art, and distribu¬
tors of these articles to the rental exchanges; (2) rental
exchanges or wholesale distributors, constituting the source
of supply of the exhibitor; (3) exhibitors of moving pictures.
By means of the Motion Picture Patents Company and the
agreements above described, defendants restrained the com¬
merce of the manufacturers and dominated and controlled
the business of the rental exchanges and exhibitors. On or
about April, 1910, defendants set out to monopolize the
bnsiness of all the rental exchanges in the United States,
their purpose being to drive out of business all persons so
engaged and to absorb to themselves the profits theretofore
made therein. This unlawful end they accomplished in the
manner to be presently described by means of a corporation
organized by them for that purpose, General Film Company,
corporation defendant.

In April, 1910, defendants, with an intent to monopolize
the rental exchange business, organized the General Fiim
Company, a Maine corporation, ‘ capital stock $2, 000, 000,
reduced March, 1911, to ?1, 000, 000, preferred $800,000, com¬
mon $200,000, common stock alone having voting rights

ORIGINAL PETITION.

and all being owned by defendants. Each of the incorpora¬
tors was connected with and interested in the business of
one of the ten Patents Company, licensees.

The following were at once elected officers and directors,
each officer and director being an officer of and largely
interested in the business of one of the ten manufacturers:

President, J. J. Kennedy, president of the Biograph Com¬
pany, and treasurer and director of the Motion Picture
Patents Company since its organization.

Vice president, George Kleine, owning the business of
George Kleine, hereinabove referred to.

Treasurer, Samuel Long, president of the Kalem Company.

Secretary, William Pelzer, also secretary of the Motion
Picture Patents Company, and an officer of the Edison Manu¬
facturing Company.

The following were elected directors:

Frank L. Dyer, president of the Motion Picture Patents
Company and vice president of the Edison Manufacturing
Company.

J. A. Berst, vice president of Patlifi Frbres.

J. J. Kennedy, president of the Biograph Company and
treasurer of the Patents Company.

Siegmund Lubin, president of -the Lubin Manufacturing
Company.

Samuel Long, president of the Kalem Company.

Gaston Melics, president of Melics Manufacturing Com¬
pany.

Albert E. Smith, president of Vitagraph Company of
America.

George K. Spoor, president of Essanay Film Manufactur¬
ing Company.

W. N. S'elig, president of the Selig Polyscope Company.

George Kleine, one of the ten licensed manufacturers.

Each one of the ten Patents Company, licensees, was repre¬
sented by one director on the board of the General Film
Company, and only representatives of those companies
were elected to that board.

The articles of incorporation of the General Film Com¬
pany recite among its purposes the following :

A copy of the charter of General Film Company is
attached hereto as a part of this petition, marked “Ex¬
hibit 6.”

Before the organization of the General Film Company
defendants, who were to be its officers and directors, had
determined the amount of money the new company should
expend in order to acquire, by purchase, by driving out of
business, by cancellation of licenses by the Patents Com¬
pany, or by other appropriate methods, all the licensed
rental exchanges, to wit, §2,480,000 cash and §988,800 in
preferred stock in the new company. Something less than
that amount defendants in fact expended before January,
1912, in bringing to a successful conclusion the unlawful plan
which they had set out to accomplish.

As has been pointed out previously (supra, 23), defendants,
through the Patents Company, had incorporated in the
license agreements with the rental exchanges a provision
authorizing the Patents Company to terminate the agree¬
ment at any time upon two weeks’ notice, and immediately

OIIIGINAL PETITION.

ORIGINAL PETITION.

upon breach of any of its terms. This provision defendants
after the formation of the General Film Company proceeded
at once to invoke. Between April, 1910, and January 1,
1912, defendants, through the General Film Company,
acquired the business or cancelled the license of every
licensed rental exchange in the United States, except one,
paying therefor $2,243,089 in cash and notes and $794,800
in preferred stock. During this period the General Film
Company purchased 57 exchanges, paying therefor the
sum just stated. Since its organization the Patents Com¬
pany has cancelled the licenses of and driven out of business
42 exchanges, of which 21 were cancelled after the General
Film Company commenced business. The result of the
conspiracy of defendants is that to-day, of all the exchanges
doing business in the United States December 18, 1908,
only one, the Greater New York Film Company, snrvives.
The latter company refused to sell out, whereupon the
defendants, through the Patents Company, cancelled its
license, but under the protection of a decree issued by the
United States District Court in New York against defend¬
ants it is still able to obtain the films of defendants.

The General Film Company was incorporated by defend¬
ants solely as an unlawful instrumentality to effect the
illegal purposes of defendants, and in order that it, in coop¬
eration with the Motion Picture Patents Company, might
drive out of business and interstate and foreign commerce
in the United States all rental exchanges and absorb their
businesses and profits and thereby enable the defendants to
further monopolize commerce relating to the motion-picture
art. The General Film Company became on its incorpora¬
tion and has ever since been a combination in restraint of
trade and commerce between the States and a monopoliza¬
tion thereof.

31
X.

Agreement Between Motion Picture Patents
Company and General Film Company.

Motion Picture Patents Company and General Film Com¬
pany, acting under the direction and domination of the in¬
dividual and other corporation defendants, with the unlaw¬
ful purposes hereinabove described, entered into an agree¬
ment April 21, 1910, unlawfully and unreasonably restrain¬
ing the interstate trade of the General Film Company and of
the 10 manufacturers, to the execution of which agree¬
ment each of the 10 Patents Company licensees assented
in writing on the same day. A copy of that agreement,
dated April 21, 1910, is attached to this petition as a part
hereof, marked Exhibit 7. Defendants have observed and
carried out said agreement since its execution and they are
now conducting their several businesses in accordance with
and in conformity to the unlawful terms and conditions es¬
tablished by said agreement. In brief, the agreement, Ex-'
Mbit 7, provides:

(1) The Patents Company grants to the General Film
Company in the United States a license to have positive
motion pictures manufactured for it by the Patents Com¬
pany licensees, and to purchase positive motion pictures
manufactured in foreign countries, and to lease such positive
motion pictures provided they are leased subject to the con¬
dition that they be used solely in exhibiting or projecting
machines containing the inventions or some of them of the
letters patent owned by the Patents Company. (Par. C.)

(2) The licensee agrees that all positive motion pictures
manufactured for it during the continuance of the agreement
shall bo manufactured only by the Patents Company,
licensees. (Paragraph 8.) This paragraph prevents the
General Film Company from purchasing, leasing, or selling
or otherwise dealing in positive motion pictures except those

65498 — 12 - 5

ORIGINAL PETITION.

manufactured for it by the Patents Company, licensees, with¬
out the consent in writing of the licensor.

(3) The Film Company agrees to pay a royalty to the licen¬
sor on all motion pictures purchased by it at the maximum
rate of one-lialf cent per running foot. (Paragraph 9.) This
royalty is subject to reduction if the amount purchased is over
4,000,000 running feet. If it runs as high as 10,000,000
feet, the royalty is reduced to 3(4 mills per running foot.
(Paragraph 10.)

(4) The Filin Company agrees not to lease, sell, or other¬
wise, dispose of motion pictures to anyone purchasing, using,
dealing in, etc., motion pictures which are not the output of
the General Film Company or of other licensees of the Patents
Company. (Paragraph 12.)

(5) The Film Company agrees that no lease of positive
motion pictures manufactured for or purchased by the
licensee shall be made in the United States except upon
certain conditions which are practically the same as those
which were stated in the rental exchange agreement executed
between the Patents Company and the rental exchanges
(supra, pp. 19 to 22) (paragraph 14), to wit:

1. The lessee (that is, the exhibitor) shall not dis¬
pose of the pictures, but shall only have the right to
use them in machines licensed by the Patents Company
under patents owned or thereafter acquired by the
Patents Company.

2. The lessee shall not sublet the motion pictures.

3. The licensee, that is, the Film Company, shall
on the first day of every month withdraw from the
market an amount of positive motion pictures equal
to the amount of such motion pictures leased by it
during the seventh month preceding the date of each
such withdrawal.

4. The violation of any of these conditions entitles
the lessor (General Film Company) to immediate
possession of such motion pictures.

(C) The Film Company agrees that it will dispose of motion
pictures manufactured for or purchased by it only by sale for
export or by lease to motion-picture exhibitors in the United
States for the purpose only of using such motion pictures
for giving exhibitions in exhibiting machines licensed by the
Patents Company under patents named or thereafter ac¬
quired. (.paragraph, 15) ; that it will not use the pictures for
the purpose of giving exhibitions thereof for profit; that it
will not knowingly allow motion pictures manufactured for
or purchased by it to be used with any exhibiting machines
not licensed by the licensor, under patents owned by it or
thereafter acquired; that it will refrain, from supplying mo¬
tion- pictures for use- with' any exhibiting machines the
license for which has been terminated and- the Film Company
notified, thereof by the licensor; that it will refrain from, sup¬
plying motion pictures, to, any lessor who may loan or sub¬
lease such, motion pictures, or who may use such pictures for
giving- exhibitions thereof in- exhibiting machines not licensed
by the. licensor or- the license for which has, been terminated,
(paragraph 15).

(7) It is provided that the agreement may be renewed
yearly, until1 August 26j 1919,. the date of expiration of Patent
707934;. known as- the Latham- “Loop” Patent. (Para¬
graph 18.)

The agreement last described, was consented, to 'by eaoh of
the- 10 Patents Company licensees, each, of whom .affixed its
consent thereto- in- writing,- such consent being given “withi
the. understanding that said’General. Film. Company is not to,
have, under, said-limited license’in writing any. voting rights’ or '
royalty-sharing rights such as those referred, to, in, said agree¬
ment’ of 'the undersigned, with- said Motion- Picture ■ Patents
Company.”

ORIGINAL PETITION.

Agreements Between the General Film Com¬
pany and Patents Company Licensees.

On April 21, 1910, with the same unlawful purposes each
of the 10 Patents Company licensees executed an agree¬
ment with the General Film Company to supply the latter
with Him to be leased to exhibitors. These agreements are
identical with each other except as to the paragraph stating
the number of running feet of film which the General Film
Company agrees to take.

Defendants by agreement with each other executed these
agreements as another means for accomplishing their unlaw¬
ful purpose to monopolize the motion-picture art and all
interstate and foreign business, trade, and commerce relating
thereto. Defendants have observed and are now observing
said agreements and all the terms thereof, and interstate
and foreign trade and commerce in articles necessary in the
motion-picture art are being restrained thereby.

A copy of the agreement between the General Film Com¬
pany and Edison Manufacturing Company, dated April 21,
1910, is attached hereto os a part hereof, marked “Exhibit 8.”
Said agreement, substantially identical with nine other
agreements concluded the same day with the other Patents
Company licensees, after reciting the interlocking restric¬
tions contained in the other agreements, provides in brief:

(1) The manufacturer (Edison Company) agrees to supply

the General Film Company with as many copies of each
licensed motion picture released by the manufacturer as the
General Film Company may require for the conduct of its
business and to supply them at the same leasing prices, terms,
etc., as it leases them to others. (Paragraph C.) ’

(2) The General Film Company agrees that it will lease
from the manufacturer motion pictures and will use its best
efforts to introduce them and extend their "use by motion

ORIGINAL PETITION. 35

picture exhibitors using the licensed projecting machines.
(Paragraph 7.)

(3) The Film Company agrees to pay the manufacturer a
share of its net profits at the end of each year during the
continuance of the agreement, after it has paid 7 per cent
dividend on its preferred stock and 12 per cent dividend on
the common stock. The manufacturer is to have such a
proportion of the net profits remaining after the deduction
of the dividends as the number of running feet of pictures
leased by the manufacturer to the Film Company bears to
the total amount of running feet leased by the Film Company
from all the Patents Company licensees during that year.
(Paragraph 8.)

(4) The agreement shall continue until August 26, 1919,
the date of the expiration of the Latham “loop” patent, No.
707,934. (Paragraph 12.)

The agreement states the minimum number of reels which
the General Film Company agrees to take, as well as the
maximum which it may be obliged to receive.

XII.

Conclusion.

Throughout the period of time mentioned in this petition
and in all their actions described herein, defendants havto
been actuated by the purpose to monopolize aU branches of
interstate and 'foreign commerce relating to the motion-
picture art and to exclude all others therefrom.

As a means to that end, they organized the Motion Picture
Patents Company, a New Jersey corporation. To it they
transferred patents competing with each other and patents
not competing, patents valuable and patents of little if
any worth.

Not satisfied with the benefit of the lawful monopolies nnd
rights belonging to them under the several letters patent
which they separately nnd independently of each other

01IIGINAI.

owned, defendants coveted the unlawful power which would
come to them if they combined all patents in one ownership;
that is, if they created and thereafter, possessed and main¬
tained a monopoly of all patents relating to the motion-
picture art. Defendants formed a combination of patents
as one of the methods for monopolizing interstate and
foreign commerce pertaining to the motion-picture art.

The. Motion Picture Patents Company is an unlawful in¬
strumentality operated and maintained by defendants solely
for the purpose of carrying into effect their unlawful intent.
The Patents Company has. never owned any property except
the patents transferred to it by defendants and which, upon
its dissolution, it must reassign, without consideration, to the
several defendants who, owned and: transferred, them to the
Patents, Company. (Supra, pp, u' to. 16.), Other than col¬
lecting royalties from defendants and. distributing such roy¬
alties among them in the manner prescribed by, the agree¬
ments, its. only business has been and is the bringing of
lawsuits under the patents, which it acquired, from defend-,
ants. Acting under the direction of the other defendants,
in order to compel observance by rental exchanges, exhibit¬
ors, and all other persons of tiic unlawful restraints embodied
in the agreements, and in order to harass and oppress all
persons engaged in the motion-picture business who have
not obeyed; its mandates, it has. brought hundreds of suits in
the. courts of. law against rental, exchanges, exhibitors, and
others. Defendants , have used their, power, great by, virtue
of . their combination, unreasonably and oppressively in order,
to further extepd, tjieir,. monopoly, and, exclude others, from
the motion-picture art,

Defendants deviled the, interlocking restrictions, described;
above, applying tq, the. use of their several , machines, applb
ances, and; apparatus as. a method, to pei-petunte. their., mo¬
nopoly. Not one of these restrictions is a legal and; reason¬

able condition attached to the use of a patented machine
by the owner of the patent acting singly and in good faith
in order to protect his lawful monopoly, but each condition
is one and a part of a combination of conditions and restric¬
tions devised by a combination of all the defendants, all the
conditions applying collectively to and interlocking the use
of all the machines. These restrictions and unlawful
restraints dovetail into each other in such a manner that
the manufacturer, the rental exchange, and the exhibitor
must use all or none of the machines covered by the different
patents. He can use no others.

With the object of concealing their true purposes and the
the real character of the combination, defendants devised,
adopted, and enforced the so-called license agreements,
attempting to give to their actions a lawful appearance and
to the combination a legal form. In the agreements they
embodied unlawful restraints upon commerce, styled by
defendants qualifications upon the use of patented machines,
but in fact unreasonable, undue, and oppressive restraints
arbitrarily imposed by them upon commerce in articles not
patented.

As previously pointed out, by far the largest and most
important part of the commerce relating to the motion-
picture art is the commerce in positive films, of which mil¬
lions of running feet are distributed each week throughout
the United States and subsequently displayed by thousands
of exhibitors throughout the country. The combination ^of
defendants was devised to restrain that commerce. Such
positive films" are not 'patented. Reissued Letters Patent
13192 (attached hereto as a part hereof, marked “Exhibit
9”), made by defendants- the basic patent of their combina¬
tion, relates only to the negative film. The positive film,
(which is sometimes copyrighted by the producer), is the
product of the negative, being developed and printed from

OHIGINAL PETITION.

the latter. The dominion of the patentee does not include
control over the product of the patented article unless new
in a patentable sense. Therefore, whether or not Reissued
Letters Patent 12192 is a valid patent, as to which grave
doubt must exist in view of the decision of the Circuit Court
of Appeals of the Second Circuit, March 10, 1902, holding
invalid the patent of which 12192 is in part a reissue and
stating that the owner of the prior patent was not the
inventor of the film (114 Fed., 934), in any event, defend¬
ants have no lawful right under the patent laws to destroy
competition in commerce and restrain commerce in the

(unpatented positive film.

Defendants, by means of the license agreements, have pre¬
vented and are preventing the importation of foreign films
except to a limited extent by defendant Kleine and corpora¬
tion defendant, Melies Manufacturing Company, who are
allowed to import only a small quantity weekly, and thereby
defendants have deprived and are depriving the public of
the advantages which would arise from competition with
foreign films.

Defendants created the General Film Company as a means
for monopolizing the commerce of the rental exchanges in the
manner hereinabove pointed out, and they are now maintain¬
ing and operating it with the same unlawful intent.

Between 70 and 80 per cent of the motion-picture film
annually manufactured and sold in the United States is the
product of the ten Patents Company licensees. This film
is shipped by the manufacturers to 45 branches of the Gen¬
eral Film Company scattered over the United States and
distributed by the latter to approximately 7,000 exhibitors.
Independent manufacturers of film may not distribute their
product through the General Film Company, which is the sole
distributing agency of the Patents Company licensees; exhib¬
itors obtaining supplies of film from the General Film Com¬
pany are not allowed to display the films of the independent

OHIGINAL PETITION. 39

manufacturers. Independent exchanges are cut off from
handling the film of the ten Patents Company licensees and
independent exhibitors and theater owners can not obtain
for exhibition in their theaters the pictures of the Patents
Company licensees.

In conclusion, all the unlawful restraints and conditions
contained in the license agreements and described in this
petition defendants to-day are observing and enforcing, and
will continue to observe and enforce unless restrained by
this honorable court.

XIII.

Jurisdiction.

Petitioner avers that the combination and conspiracy to
restrain interstate and foreign commerce and motion-picture
films, machines, and apparatus relating to the motion-picture
art still exists; that the defendants are carrying out and
engaging in the some within the State of Pennsylvania
within the Eastern District of said State, and that many of
the things herein complained of have been committed in
whole and others in part within the said State and district
and are now being committed therein; that the defendant
Lubin Manufacturing Company is located at and doing
business within said State and district

XIV.

Prayer.

Wherefore petitioner prays :

1. That the combination hereinbefore described, in and of
itself, as well ns each and all of the elements composing it,,
whether corporate or individual, whether considered collec-.
tively or separately, be decreed to be in restraint of interstate ,
and foreign trade- and. an attempt to monopolize and. a
monopolization thereof within the first and second sections
of the act of Congress of July 2, 1890, entitled “An act to

ORIGINAL

ORIGINAL PETITION.

protect trade and commerce against unlawful restraints and
monopolies.”

2. That the court adjudge the Motion Picture Patents
Company and the General Film Company, severally and
respectively, to he a combination in restraint of interstate
and foreign trade and commerce in motion-picture films and
other articles relating to the motion-picture art, a restraint,
and an attempt to monopolize and a monopolization thereof,
and that the court direct a dissolution of each of said com¬
binations.

3. That the court adjudge the Motion Picture Patents
Company and the General Film Company, severally and
respectively, to be an unlawful instrumentality operated and
maintained by defendants solely for the purpose of carrying
into effect the illegal purposes of said contracts, combina¬
tions, and conspiracies in restraint of interstate trade
and commerce and of said attempts to monopolize, and
monopolies.

4. That the court adjudge that the various so-called
license agreements described in the petition, entered into be¬
tween the Motion Picture Patents Company and the 10 Patents
Company licensees, and the so-called license agreements
between the Motion Picture Patents Company and the General
Film Company, and the agreements between the General Film
Company and the 10 Patents Company licensees, and all other
license agreements referred to and described in the petition,
were devised, planned, entered into, and are now being observed
and enforced solely for the purpose of enabling the defendants
to carry into effect the objects and purposes of said unlawful
combination and conspiracy in restraint of said interstate and
foreign trade and commerce; that each of said agreements
be declared illegal, and be cancelled, and that, the dt.fon.i-
ants, and all and each of them, and their oflmers, agents,
servants, and employees, be enjoined and prohibited from

doing anything in pursuance or in furtherance of said agree¬
ments, and from enforcing in any manner said agreements,
or any of the terms thereof, in interstate and foreign
commerce.

5. That the court by way of an injunction restrain the
movement of the products of the 10 Patents Company
licensees and of the General Film Company in the channels
of interstate commerce until the decree of the court respecting
the Motion Picture Patents Company, the General Film Com¬
pany, and the said so-called license agreements has been
carried into effect by defendants and said Patents Company
and General Film Company dissolved and said agreements
canceled.

6. That the court adjudge that the patents named in the
so-called license agreements referred to and described in the
petition, now claimed to be held and owned by defendant
Motion Picture Patents Company, • were acquired, and are
now held by said defendant by virtue of such combination
and conspiracy in restraint of trade and commerce among
the several States and with foreign nations, and solely to
effectuate the unlawful objects and purposes of the same,
and that the said Motion Picture Patents Company, its offi¬
cers, directors, and agents, be enjoined .'from exercising or
attempting to exercise any control, direction, supervision,
or influence whatever over the interstate or foreign commerce
of the other defendants by virtue of said company holding
said patents or otherwise.

7. That the defendants and all and each of them be
enjoined, and prohibited from entering into or continuing
any similar combination or conspiracy, and from agreeing,
combining, conspiring, and acting together to prevent each
and any of them from carrying on interstate and foreign
trade and commerce in motion picture films and other arti¬
cles relating to the motion picture art in competition with the

ORIGINAL PETITION.

- y-

8. That the United States may have such other and fur¬
ther relief as the nature of the case may require and the
court may deem proper in the premises.

To the end, therefore, that the United States of America
may obtain the relief to which it is justly entitled in the
premises, may it please your honors to grant unto it writs
of subpoena directed to the said defendants: Motion Picture
Patents Company, General Film Company, the Biograph
Company, Thomas A. Edison (Inc.), Essanay Film Manu¬
facturing Company, the Kalem Company (Inc.), George
Kleine, Lubin Manufacturing Company, Melies Manufacturing
Company, Patlid Frfcres, Selig Polyscope Company, Vitagraph
Company of America, Armat Moving Picture Company,
Frank L. Dyer, Henry N. Marvin, J. J. Kennedy, William
Pelzer, Samuel Bong, J. A. Berst, S'icgmund Lubin, Gaston
Melies, Albert E. Smith, George K. Spoor, W. N. Selig, and
each and every one of them, commanding them and each
of them' to appear herein and answer, but not under oath
(answer under oath being hereby expressly waived), the
allegations contained in the foregoing petition and abide by
and perform such orders and decree as the court may make
in the premises.

John C. Swartley,
United States Attorney.

George W. Wickersham,

Attorney General.

James A. fowler,

Assistant to the Attorney General.

Edwin P. Grosvenor,

Special Assistant to the Attorney General.

Exhibit 1.

Charter of motion Picture Patents Company.

This is to certify that we, the undersigned, do hereby
associate ourselves into a corporation under and by virtue
of the provisions of an act of the legislature of tiie State of
New Jersey entitled “An act concerning corporations (re¬
vision of 189G),” and the supplements thereto and acts
amendatory thereof, for the purposes hereinafter mentioned,
hereby claiming for ourselves all the rights and privileges
now or hereafter granted by the laws of the State of New
Jersey to corporations, and to that end we do by this our
certificate set forth :

First. The name which we have assumed to designate
such corporation and to be used in its business and dealings
is “Motion Picture Patents Company.”

Second. The location of the principal office of the corpora¬
tion in this State is at No. 15 Exchange Place, Jersey City,
in the county of Hudson. The name of the agent therein
and in charge thereof upon whom process against the cor¬
poration may be served is Charles L. Carrick.

Third. The objects for which this corporation is formed
are to acquire by purchase, lease, pa/ment of royalties, or
otherwise, letters patent, inventions and improvements in
materials, processes, and apparatus relating to the produc¬
tion of negatives and positives for motion pictures, and also
relating to the photographing, developing, reproducing,
projecting, and exhibiting of scenes and objects at rest and
in motion; to mortgage, sell, lease, dispose of by agreement
or otherwise, such letters patent, licenses under letters
patent, and improvements, and to license others to use the
inventions covered by the said letters patent and to use such
improvements; to purchase, hold, sell, and convej*such real
and personal property as shall be lawful and adapted to the
requirements of the business of the company.

44 ORIGINAL PETITION, EXHIBIT 1.

This corporation shall also have power to conduct its busi¬
ness in all its branches and to have one or more offices and to
hold, lease, or convey real or personal property outside of the
State of New Jersey and in all other States and in all foreign
countries to which the business of the company may be here¬
after extended, and to do any acts or things designed to pro¬
tect, improve, or enhance the value of any of such patents
and of other property of the corporation.

Fourth. — The amount of capital stock of the company m
one hundred thousand dollars (§100,000) divided into one
thousand (1,000) shares of the par value of one hundred dol¬
lars (§100) each. The amount of capital stock with which
the company shall commence business is two thousand dol¬
lars (§2,000).

Fifth.— The names and post-office addresses of the incor¬
porators and the number of shares subscribed for by each are
as follows :

Hugh H. Harrison, Brook Haven, "n'-'y .

William H- Lane, 4 Boulevard, Westfield,' N. J. . . .' . . . " . . . . 5

Sixth.— The existence of this corporation shall begin on
the day of the filing of these articles of incorporation in the
office of the secretary , of state of New Jersey and shall con¬
tinue for a period of fifty (50) years from that date.

In witness whereof we have hereunto set our hands and
seals this 8th day of September, nineteen hundred and eight.

Hugh H. Haiuiison. [l. r.]
Geo. J. Murray. [l. s.]
William H. Lane. [l. s.]

In presence of Guernsey R. Jewett as to Hugh H. Harrison
Geo. J. Murray, and William H. Lane.

“Filed and recorded September 9, 1908.

“S. D. Dickinson,
“Secretary of State.”

Exhibit 2.

Preliminary Agreement lor Assignment of
Patents Between motion Picture Patents
Company and Edison Manufacturing Com¬
pany, December 18, 1908.

Agreement made this 18th day of December, 1908, by
and between the Motion Picture Patents Company, a cor¬
poration organized and existing under the laws of the State
of New Jersey, and having an office at Jersey City in said
State (hereinafter referred to as the “Patents Company”),
party of the first part, and the Edison Manufacturing Com¬
pany, a corporation organized and existing under the laws
of the State of New Jersey, and having an office at Orange
in said State (hereinafter referred to as the “Edison Com¬
pany”), party of the second part:

(1) Whereas the Edison Company represents that it is
the owner of all the right, title, and interest in and to reissued
United States Letters Patent No. 12037, dated September
30, 1902, and reissued United States Letters Patent No.
12192, dated January 12, 1904, and that there are no out¬
standing licenses under the said letters patent other than
those hereinafter referred to, and

(2) Whereas the Edison Company represents that it has
heretofore granted licenses in writing to manufacture and
use the inventions described and claimed in said reissued
Letters Patent No. 12037, and to manufacture and sell the
invention described and claimed in the said reissued Letters
Patent No. 12192, to the Vitngraph Company of America,
of New York; Slegmund Lubin, of Philadelphia; the Selig
Polyscope Company of Chicago; the Essanay Company
of Chicago; the Kalem Company of New York; and the
George Melics Company of Chicago, all dated January 31,
1908, and to Patlid Fibres of New York, dated May 20, 1908,
to go into effect June 20, 1908 (the licensees under snid
license agreements being hereinafter referred to as “Edison
Licensees”), and the Edison Company further represents

4G ORIGINAL PETITION, EXHIBIT 2.

that the said Edison Licensees are willing to suspend the
operation of the said licenses; and

(3) Whereas, the Edison Company represents that it
has heretofore entered into two agreements in writing,
dated May 20, 1908, with the Eastman Kodak Company, a
corporation of New York (hereinafter referred to ns the
“Eastman Company”), granting the right to the said East¬
man Company to supply “licensed film” to the Edison
Licensees, and that the Eastman Company is willing to
terminate the said agreements; and

(4) Whereas, the Patents Company represents that it
has an authorized capitalization of one hundred thousand
dollars (§100,000), of which twenty (20) shares of a par
value of §2,000 are outstanding, and whereas, the Edison
Company desires to acquire fifty thousand dollars (§50,000)
of the capital stock of the Patents Company, and is willing
to assign to the Patents Company all of its right, title,
and interest in and to the said reissued United States letters
patent and is willing to suspend the operation of the said
licenses granted thereunder, and to terminate the said
agreements with the Eastman Company, in consideration of
the payment to the Edison Company of forty-nine thousand
dollars (§49,000) of the capital stock of the Patents Com¬
pany, and one thousand dollars (§1,000) in cash, provided
that for the said one thousand dollars in cash, the Patents
Company shall have assigned to the Edison Company ten
(10) shares of the said capital stock at a par value of one
thousand dollars (§1,000) ; and

(5) Whereas, the board of directors of the Patents Com¬
pany has ascertained, adjudged, and declared that the said
right, title, and interest in the said reissued letters patent
free from the operation of the said licenses and agreements,
are of the fair value of fifty thousand dollars (§50,000) and
that the acquisition thereof is necessary for the business of
the Patents Company and to carry out its contemplated
objects,; and

(G) Whereas, the Patents Company represents that it lias
acquired or will acquire from the Vitagrapli Company of
America, of New York, all the right, title, and interest in and

ORIGINAL PETITION, DXniBIT 2. 47

to United States Letters Patent Nos. 673329, 744251, 770937,
771280, 785205, and 785237 (hereinafter referred to as the
“Vitagrapli patents”) all of which relate to motion picture
projecting machines, and has agreed to pay to the said Vita-
graph Company of America a royalty of one dollar (§1) on
each projecting machine embodying one or more of the inven¬
tions described and claimed in the said Vitagrapli patents
made and sold under any licenses for the manufacture and
sale of such projecting machines, granted by the Patents
Company (said royalties being hereinafter referred to ns
“Vitagraph royalties”) and also further represents that it
has acquired or will acquire from the American Mutoscopo
and Biograph Company, a corporation of New Jersey (here¬
inafter referred to as the “Biograph Company”), and the
Armat Moving Picture Company, a corporation of West
Virginia (hereinafter referred to as the “Armat Company”),
all the right, title, and interest in and to United States Let¬
ters Patent Nos. 578185, 580749, 58G953, 58891G, 629063,
673992, 707934, and 722382, nil of which relate to motion
picture projecting machines or cameras; and

(7) Whereas, the Patents Company represents that it con¬
templates deriving royalties under patents covering pro¬
jecting machines owned by the Patents Company from
manufacturers of projecting machines (hereinafter referred
to as “machine royalties”) ; royalties from exhibitors for the
use of projecting machines licensed under any or all of thq
patents covering projecting machines owned by the Patents
Company (hereinafter referred to os “exhibitors' royal¬
ties”), and royalties derived from manufacturers and import¬
ers of motion pictures under said reissued United States Let¬
ters Patent Nos. 12037 and 12192 (hereinafter referred to
as “dim royalties”) ; and

(8) Wherens, the Patents Company has agreed to pay to
the manufacturers and importers of licensed motion pictures,
except the Biograpli Company and the Edison Company, 24
per cent (24%) of the gross exhibitors royalties;

Now; therefore, this indenture witnesseth that:

(9) The Edison Company, in and by these presents, does
agree to assign, transfer, and set over unto the Patents

48 ORIGINAL PETITION, EXHIBIT 2.

ORIGINAL PETITION, EXHIBIT 2. 49

Company and its successors in business, tbe entire riglit,
title, and interest in and to tlie said reissued United States
Letters Patent, Nos. 1203T and 12192, and tlie inventions
described and claimed therein, and tlie right to sue for and
recover damages and profits for past infringement of the said
reissued letters patent and of each of them, and to enter into
agreements in writing with tbe said Edison Licensees sus¬
pending the operation of the licenses granted by the Edison
Company under tlie said reissued United States Letters
Patent to the said Edison Licensees, so long as the said
reissued letters patent are owned by the Patents Company,
and to enter into agreements in writing with the Eastman
Company terminating the agreements in writing referred to
in paragraph 3 hereof, so long as the said reissued letters
patent are owned by the Patents Company.

(10) The Patents Company hereby covenants and agrees,
in consideration of the said agreement of the Edison Com¬
pany, and upon the assignment of the said reissued letters
patent to the Patents Company, and upon the making of the
said agreements in writing by and between the Edison Com¬
pany and' the Edison Licensees and tne Eastman Company,
to issue to the Edison Company certificates of stock of the
Patents Company to the aggregate amount of four hundred
and ninety (490) shares, of a par value of forty-nine thousand
dollars ($49,000), and to pay to the Edison Company one
: thousand dollars ($1,000) in cash, and the Patents Company
further covenants and agrees that at the same time there
shall be assigned to the Edison Company for the said $1,000
in cash ten (10) shares of the capital stock of the Patents
Company at a par value of one thousand dollars ($1,000).

(11) The Edison Company covenants and agrees that it
has canceled or will cancel any licenses, shop rights, or
other rights which may have been heretofore granted under
either or both of tlie said reissued United States letters
patent to any person, firm, or corporation other than the
Edison Licensees, and the Edison Company further covenants
and agrees that it will save harmless in all respects the
Patents Company from any claim under any agreement, con¬
tract, or other obligation which the Edison Company or its

a title may have entered into or assumed with
any person, firm, or corporation concerning or involving any
licenses, shop right, or other right under any or all of the
said reissued letters patent.

(12) The Patents Company further covenants and agrees
that it will keep in separate accounts the incomes from film
royalties, from machine royalties, and from exhibitors’ royal¬
ties, and that the general and' contingent expense of the
Patents Company (which shall not include any expense in¬
curred in any litigation) shall not exceed fifty thousand
dollars ($50,000) in any one year. The Patents Company
further covenants, and agrees that on June 20, 1909, and at
the end of each and every year thereafter until the expira¬
tion of the said reissued United States -Letters Patent Nos.
12037, and 12192, and on August 14, 1914, the date of ex¬
piration of the said reissued letters patent, it will make
up the accounts of and distribute the said royalties for
the preceding year or portion thereof, as the case may be,
in the following manner :

First. From the machine royalties shall be deducted the 1
Vitagrapli royalties for payment to the Vitngrapli Company 1
of America, and from the exhibitors’ royalties shall be de- 1

ducted 24 per cent (24%) thereof for payment to the innnu- _ J

facturers and importers of licensed motion pictures.

Second. From the film royalties and the remainders of the
machine royalties and of the exhibitors’ royalties shall be de¬
ducted the general and contingent expense for the preceding
year or portion thereof, ns the case may be, together with any
expense for litigation which may have .been incurred by the
Patents Company, in shares proportioned according to the
ratio which each of said sums bears to tlie gross income of
the Patents Company for that year or portion thereof, the
remainders of such sums after the said deductions are made
being hereinafter referred to ns "net film royalties,” “net
machine royalties,” and “net exhibitors’ royalties,” re¬
spectively.

Third., The net film royalties, the net machine royalties,
and the net exhibitors’ royalties shall be paid to the trustee
:provided for in paragraph 14 of this agreement as a dividend

50 ORIGINAL PETITION, EXHIBIT 2.

upon the capital stock of the Patents Company and the said
trustee shall be instructed to divide and pay the said divi

dend in the following manner:

(а) To the Edison Company shall be assigned and p.i

an amount equal to the net film royalties. _

(б) The remainder of the dividend, up to an amount
equal to the net film royalties, shall be assigned and paid to
the Biograph Company and the Armat Company, respec¬
tively in the proportion of two-thirds (2/3) to the Biograph
Company and one-third (1/3) to the Armat Company.

(c) If any balance remains after the foregoing payment ,
it shall be divided and paid to the Edison Company, the
Biograph Company, and the Armat Company, m the pro¬
portion of one-half (%) to the Edison Company, on^Biml
(1/3) to the Biograph Company, and one-sixth (1/6) to the
Armat Company.

(13) The Patents Company further covenants and agrees
that, on August 31, 1915 (one year after 1 tbe date of the
expiration of reissued Letters Patent Nos. 12037 and 12192),
and at the end of each and every year thereafter, it will pay
to the trustee provided for in paragraph 14 of this agreement
all of its net profits for the preceding year, which consists
of the net machine royalties, the net exhibitors’ royalties and
the net sum of any royalties which the Patents Company
may collect in lieu of the present film royalties (such net
amounts being determined as provided for in paragraph 12
hereof) as a dividend upon the capital stock of the Patents
Company, and will instruct the trustee to divide the said
dividend and pay to the Edison Company therefrom an
amount equal to one-half (y2) of such dividend.

/(U) The Edison Company further covenants, and agrees
7 not to pledge, sell or otherwise dispose of its capital stock in
the Patents Company, except the minimum number of shares
sufficient to qualify one-half of the total number of directors
which the Patents Company may have, without the consent
IC'^of the Biograph Compnny and the Armat Company, and
VT ' the Edison Company further agrees to deposit its certificates
of stock in the Patents Company, except such as represent
the said qualifying shares for directors, with a responsible

ORIGINAL PETITION, EXHIBIT 2. 51

trust company named by the Patents Company, as trustee,
and to instruct the said trustee not to release, transfer, or fts
return the said certificates so deposited, without the consent j
of the Biograph Company and the Armat Company, - - - -

(15) It is further mutually covenanted and agreed by and
between the Patents Company and the Edison Company
that this agreement shall take effect on the date hereof, and
that if during the life of this agreement either party should
knowingly or through gross neglect or carelessness be guilty
of a breach, violation, or nonperformance of its covenants,
conditions, and stipulations, resulting in substantial injury
to the other party, and should for the period of thirty days
after notice thereof from the other party, persist therein or
fail to correct, repair, or remedy the same, then and in such'
case the party aggrieved may terminate this agreement by
giving thirty days’ notice in writing to the guilty party of
its intention so to do, and it is further mutually covenanted
and agreed that this agreement may also be terminated by
either of the parties hereto in case that the Patents Company
should become bankrupt, cease doing business, or should be
dissolved voluntarily or otherwise, or its charter should be
repealed. It is also further mutually covenanted and agreed
that, upon the termination of this agreement for any of the
foregoing causes, or any other cause, all of the right, title,
and interest in and to the said reissued United States Letters
Patent Nos. 12037 and 12192 shall be reassigned by the
Patents Company to the Edison Company for and in con¬
sideration of the sum of one dollar ($1).

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorised
to perform these acts, the day and year first above written.

[seal.] Motion Picture Patents Company,

By H. H. Harrison, President.

Attest:

Geo. J. Murray, Secretary .

[seal.] Edison' Manufacturing Company,

•By Prank L. Dyer, Pice President.

Attest:

A; Westie, Secretary.

ORIGINAL PETITION, EXHIBIT 3.

Exhibit 3.

license Agreement Under the Camera and
Film Patents Between Motion Picture Pat¬
ents Company and Biograph Company,
December 18, 1908.

(a) This agreement, made this 18th day of December,
1908, by and between Motion Picture Patents Company,
a corporation organized and existing under the laws of the
State of New Jersey, and having an office at Jersey City,
in said State, party of the first part (hereinafter referred to
as the Licensor), and American Mutoscope and Biograpli
Company, a corporation organized and existing under the
laws of the State of New Jersey, and having an office at
New York City, party of the second part (hereinafter referred
to as the Licensee), witnesseth:

(b) Whereas, the Licensor represents that it is organized
to own, deal in, and grant licenses under letters patent
pertaining to the motion-picture art, and that it is the owner
of all the right, title, and interest in and to United States
Letters Patent-

No. 578185, dated March 2, 1897, for Yitascope, granted
to Thomas Armat;

No. 580749, dated April 13, 1897, for Vitascope, granted
to Thomas Armat;

No. 586953, dated July 20, 1897, for Phantoscopc,
granted to Charles F. Jenkins and Thomas Armat;

No. 588916, dated August 24, 1897, for Kinetoscope,
granted to Charles M. Campbell as the assignee of
Willard G. Steward and Ellis F. Frost;

No. 629063, dated July 18, 1899, for Kinetoscopic,
Camera, granted to American Mutoscope Company
as the assignee of Herman Caslet;

No. 073329, dated April 30, 1901, for Kinetoscope,
granted to the American Vitagraph Company as the
assignee of Albert E. Smith;

No. 673992, dated May 14, 1901, for Yitascope, granted
. to Thomas Armat;

No. 707934, dated August 26, 1902, for Projecting
Kinetoscope, granted E. & H. T. Anthony & Co. as
assignees of Woodvillo Latham;

No. 722382, dated March 10, 1903, for Animated Pic¬
ture Apparatus, granted to American Mutoscope &
Biograph Company as the assignee of John A. Pross;

No. 744251, dated November 17, 1903, for Kinetoscope,
granted Albert E. Smith;

No. 770937, dated September 27, 1904, for Kinetoscope,
granted the Vitagraph Company of America as the
assignee of Albert E. Smith ;

No. 771280, dated October 4, 1904, for Winding-Eeel
granted Albert E. Smith;

No. 785205, dated March 21, 1905, for Flame-Shield for
Kinetoscopes, granted the Vitagraph Company of
America as the assignee of William Ellwood ; and

No. 785237, dated March 21, 1905, for Film-Holder for
Kinetoscopes, granted the Vitagraph Company of
America as the assignee of Albert E. Smith ;
all of which said letters patent relate to improvements in
the motion picture art, and that there are no outstanding
licenses, shop rights, or other rights under said letters patent,
or either of them, except a license for Parlor Kinetoscopes
granted the Karmata Company, of Washington, D. C.,
under Letters Patent Nos. 578185, 580749, 586953, and
673992, and certain alleged licenses under U. S'. Letters
Patent No. 586953, which are in dispute, claimed to be
owned by the Edison Company and the American Grapho-
plionc Company, of Washington, D. C., and S. Lubin, of
Philadelphia, Pennsylvania; and excepting a license granted
by the American Mutoscope & Biograpli Company to the
firm of Marvin and Casler to manufacture and sell cameras
and exhibiting or projecting machines under letters patent
owned by it (some of which are hereinbefore referred to)
for use in foreign countries only, and excepting certain
licenses granted by the Armat Motion Picture Company to
the American Mutoscope & Biograpli Company under

54 OHIGINAL PETITION, EXHIBIT 3.

Letters Patent Nos. 57S1S5, 580749, 58G953, 58S91G, and
G73992, and by the latter company to the former company
under Patents Nos. 707934 and 722382, which licenses are,
however, by agreement between said parties, suspended and
are not to be acted upon until the Licensor becomes bank¬
rupt, ceases doing business, or shall be dissolved voluntarily
or otherwise, or its charter shall be repealed; and

(o) Whereas, the Licensor is the owner of all the right,
title, and interest in and to reissued Letters Patent of the
United States Numbered 12037, dated September 30, 1902,
and 12192, dated January 12, 1904, the original Letters Pat¬
ent whereof are Numbered 589108 and dated August 31, 1897,
and that there are no outstanding licenses, shop rights, or
other rights under said reissued letters patent, or either of
them, except license agreements thereunder between the
Edison Company and Pathe Freros of New York, dated May
20, 1908 (to go into effect June 20, 1908), and between the
Edison Company and the Kalem Company, of New York; the
Essanay Company, of Chicago; Siegmund Lubin, of Phila¬
delphia; George Melics Company, of Chicago, Illinois; the
Selig Polyscope Company, of said Chicago, and the Vitagrapli
Company of America, of New York, all dated January 31,
1908; and

(d) Whereas, the Edison Company, the Licensee and the.
other licensees before mentioned under the said reissued
Letters Patent, Numbered 12037 and 12192, hnve suspended
the operation of the said license agreements; and

(o) Whereas, the Licensee is engaged in the manufacture
and sale of motion pictures, including the printing of positive
motion pictures from negntive motion pictures of the
Licensee’s own production, and, relying upon the aforesaid
representations of the Licensor, and induced thereby, desires
to obtain from the Licensor a license under said two reissued
Letters Patent Numbered 12037 and 12192, and Letters
Patent Nos. G29003 and 707934, and to lease positive motion
pictures for use in exhibiting or projecting machines contain¬
ing the inventions, or any of them, described and claimed in
said Letters Patent Nos. 57S185, 680749, 580953, 58891G,
G73329, 673992, 707934, •• 722382, 744251, 770937, 771280,

OBIGINAL PETITION, EXHIBIT 3. 55

785205, and 785237, and to sell positive motion pictures on
film of a width approximately one (1) inch or less in certain
territory and on film of any width in certain territory :

(/) Now therefore, the parties hereto, for and in considera¬
tion of the sum of one dollar to each in hand paid by the
other, and for other good and valuable considerations from
each to the other moving, receipt of all of which is hereby
acknowledged, have agreed as follows :

1. The Licensor hereby grants to the Licensee for the tem
and subject to the covenants, conditions, and stipulations
hereinafter expressed, the right and license under said
reissued Letters Patent No. 12037 and Letters Patent Nos.
6290G3 and 707934, for the United States, its territories,
dependencies, and possessions (hereinafter called the “terri¬
tory aforesaid”) to manufacture and use such a number of
cameras embodying the inventions of said reissued Letters
Patent No. 12037 and Letters Patent Nos. 029003 and 707934,
as may be necessary for the proper conduct of the Licensee’s
business, and to manufacture, print and produce positive
motion pictures embodying the inventions of said reissued
Letters Patent No. 12192, and to lease the same in the United
States, its territories, dependencies, and possessions (with the
exceptions of its insular possessions and Alaska), hereinafter
referred to ns the “lease territory aforesaid,” on film of a
greater width than approximately one (1) inch, upon condi¬
tion that they be used solely in exhibiting or projecting
machines containing the inventions or some of them of said
Letters Patent Nos. 578185, 580749, 580953, 588916, G73329,
673992, 707934, 722382, 744251, 770937, 771280, 785205 and
785237, and licensed by the Licensor, and to sell positive
motion pictures embodying the invention of said reissued
Letters Patent No. 12192, on film of a width approximately
one (1) inch or less in the “lease territory aforesaid”: and on
film of any width in or for said insular possessions and Alaska
and foreign countries, hereinafter referred to as “said export
territory” or “for export.”

The Xiccnse hereby granted is personal to the Licensee
and docs not include the right to dispose of, in the “territory
aforesaid,” any cameras embodying any invention covered
65498-12 — 8

Jfc

5C OltlGINAL PETITION, EXHIBIT 3.

by said reissued Letters Patent No. 12037 and Letters
Patent No. G290G3 and 707934; and, in the event of the
permanent discontinuance or retirement from business of
the Licensee for a period of six consecutive months, the
license hereby granted shall he immediately terminated.

2. The Licensor, for itself, its successors, assigns and legal

representatives, hereby releases, acquits, and discharges the
Licensee from any and all claims, demands, and liability for
profits and damages, because of any infringement by the
Licensee of any or all of the aforesaid United Letters Patent
Nos. 578185, 580749, 58G953, 58891G, G290G3, G73329,

673992, 707934, 722382, 744251, 770937, 771280, 785205,

and 785237, and reissued Letters Patent Nos. 12037 and
12192, or use by the Licensee of the inventions, or any of
them, covered by said letters patent or either of them prior
to the date hereof.

3. The Licensee hereby recognizes and admits the validity

of said reissued Letters Patent No. 12037, so far as the first
three claims thereof are concerned, and the validity of said
reissued Letters Patent No. 12192 and Letters Patent Nos.
578185, 580749, 586953, 58891G, 629063, 673329, 673992,

707934, 722382, 744251, 770937, 771280, ' 785205, and

785237, and the Licensee agrees not to contest or question
the same during the continuance of this agreement.

4. The Licensee covenants and agrees that in the manu¬
facture of motion pictures, both negative and positive in the
"territory aforesaid,” during the continuance of this agree¬
ment, the Licensee will use exclusively sensitized film manu¬
factured and sold in the United States by a manufacturer
or manufacturers authorized by the Licensor, such sensi¬
tized film hereinafter called “licensed film,” nnd that the
Licensee will not, in the “territory aforesaid,” purchase or
otherwise acquire or lease or sell or otherwise dispose of or
deal in, motion pictures produced on or by the use of any
other film than such “licensed film,” nor sell or otherwise
dispose of any negative motion pictures.

The Licensor further covenants nnd agrees that it will,
in an agreement in writing with each manufacturer of
“licensed film,” obligate such manufacturer, so long ns

OltlGINAL PETITION, EXHIBIT 3. 57

the latter has the exclusive right to make and sell such
“licensed film,” not to knowingly furnish or sell, in the
“territory aforesaid,” except “for export,” sensitized film
for the commercial production of negative and positive
motion pictures to anyone but the Licensee, and the addi¬
tional licensees hereinafter provided for, except to the
extent of 2% per cent of the total amount of such “licensed
film” supplied by such manufacturer to the parties to the
license agreements referred to in paragraph (c) during the
year preceding June 20, 1909, and to the Licensee and the
additional licensees hereinafter provided for, during any
one year thereafter during the continuance of such agree¬
ment, which amount such manufacturer shall have the right
to furnish or sell, in the “territory aforesaid,” to persons
not engaged in the business of manufacturing, leasing, sell¬
ing, loaning, renting out, or otherwise disposing of or dealing
in motion pictures in the “territory aforesaid”; and with
the further exception flint such manufacturer may also
reserve the right to manufacture and sell sensitized film
suitable for the commercial production of negative and
positive motion pictures, of a width not to exceed approxi¬
mately one (1) inch in the “territory aforesaid,” to persons,
firms, and corporations engaged in the business of manufac¬
turing, leasing, selling, loaning, renting out, or otherwise
disposing of or dealing in motion pictures in the “territory
aforesaid,” but upon the condition that in case any of them
produces thereon any picture greater in size than approxi¬
mately three-quarters (%) of an inch on n line cither parallel
to or at right angles to the edge of such film, and such
manufacturer has knowledge thereof, such manufacturer
will cease supplying such film to any person, firm, or cor¬
poration so doing; and with the further exception that such
manufacturer may also reserve the right to manufacture
and sell in the “territory aforesaid” such sensitized film
suitable for the commercial production of negntive nnd posi-'
tive motion pictures of any width, to persons, firms, and
corporations now having an established business of manu¬
facturing motion pictures in any country foreign to the
United States, who now manufacture negative and positive

motion pictures in, the, United! States, on who. may, after the,
" £ agreement commence the manufacture oD nega-
^e or positive0 motion, pictures in the United States

Tlie. Licensor further covenants and agrees ^ J
royalties which it will charge to and receive from the Licensee
for “licensed, film” (,and which, are to. be included, by to
manufacturer or manufacturers in the prices, charged f
“tensed fllt> to the Licensee and- paid over to. the Lmenson),
shall not for “licensed film” of a width approximately
one inch and, three-eighths of, an inch or- thir.ty,ave

(351, millimeters, purchased by the Licensee, during to yean

during the continuance of, this agreement, as hereafter
provided; exceeding the following rates; that is to- say,:

Tto’ shipments, of such, “licensed film” to the Licensee
or the Licensee's orders, for any, such, year be. four million,
running feet or less, a royalty of one-half (i/2). cent per run-
nine foot on the total, number of running feet for that year,,
if such shipments, on the Licensee’s orders, of. such “licensed,
filin’’ for any such year exceed four million, running, feet
but do not exceed six million, running feet, a royalty of. four
and one-half (-4%-): mills per running foot on. the, total number
of running feet for that year; if such, shipments, on the
Licensee’s orders, of such, “licensed- film!’ for any such year,
exceed six million running feet but do, not exceed, eight
million running feet, a royaltyof four (4), mills- per running;
foot on. the total- number, of winning feet for tlmt year; if
such shipments, on the- Licensee’s, orders, of. such, “licensed,
film” for. any such yenr exceod, eight, million, running feet
but do not exceed ten million, running, feet, a, royalty of. three,
and three-quarters (33/,,) mills per running, foot on the. total-
number- of running feet for tlmtr year;. and, if such. shipments,,
on the- Licensee’s orders, of snoli. “licensed, film!’ for. any
such; year exceed ten, million, running feet, a» royalty, of three
and, one-quarter (3%) nulls- per. running foot on the total-
number of running, feet for that year. And, for “licensed,
film’’ narrower or widor than approximately one and- throe-
eighths (13/S im) inch- or thirty-five (35) millimeters,, the
nbove-montioned royalty rates- shall, he reduoed or increased

ORIGINAL PETITION, EXHIBIT 3. 59

in proportion to to reduction or increase in width of such
narrower or -wider “licensed film” below or above the
width of such “licensed fllm” of approximately one and
three-eightlis (1% in.) inch or thirty-five (35) millimeters.

The Licensor and Licensee further mutually covenant
and agree that the manufacturer of such “licensed Him”
shall in to first instance— that is to say, when such film is
hilled and shipped by it— charge the Licensee with its price
per running foot plus the maximum royalty aforesaid, and
on the expiration of each year, counting from June 20tli,
1909, shall adjust the royalty account of the Licensee as to
“licensed film” so billed and shipped to and paid for by
to Licensee, according to the royalty schedule aforesaid,
returning to to Licensee any amount the Licensee shall
have overpaid, according to said schedule, and paying the
balance to to Licensor; and that the royalties which may
hereafter be paid to the manufacturer of such “licensed
film” after the date hereof and up to June 20, 1909, under
this agreement, shall he adjusted and the excess returned,
in the same manner, the royalty rate to be charged for such
period being to rate that would have been charged if the
shipments of “licensed film” to the Licensee had been
continued for a year at the same rate at which shipments
were made for such period.

The Licensor further agrees that the dealings between
the Licensee and the authorized manufacturer or manu¬
facturers from whom the Licensee purchases such “licensed
film” shall, in so far ns the number of running feet ordered
by or shipped to the Licensee or anything that would indi¬
cate or disclose the number of such feet is concerned, be a
matter of confidence between the Licensee and such manu¬
facturer or manufacturers, who shall hot be at liberty to
disclose, and moreover shall be bound in writing not to
disclose, directly or indirectly, to the Licensor or any of
the additional licensees hereinafter provided for, the num¬
ber of such feet of “licensed film” so ordered by or shipped
to the Licensee; the Licensor further agreeing to so arrange
or provide for the reports and royalty payments to be made
to : it by such manufacturer or manufacturers that tlie

CO ORIGINAL PETITION, EXHIBIT 3.

latter shall make such reports and royalty payments in
gross as to all of the licensees to whom shipments of such
“licensed film” are made, and without specifying the
number of running feet of “licensed film” so shipped to any
of them, either by a statement in writing of the number of
such feet or the amount of royalties paid or to be paid by
such manufacturer or manufacturers for or on account
thereof.

The Licensor and Licensee further mutually covenant
and agree that no royalty other than or in addition to that
provided for in this paragraph shall be charged to or col¬
lected from the Licensee by the Licensor up to Juno 20,
1910, or during any renewal of this agreement up to August
31, 1914, the date of the expiration of said reissued Letters
Patent Nos. 12037 and 12192, and no royalty whatever
shall be charged to or collected from the Licensee by the
Licensor after cither the first, second, and third claims of
said reissued Letters Patent No. 12037 and cither of the
claims of said reissued Letters Patent No. 12192, in any
suit as hereinafter provided for, for infringement thereof,
are held invalid by a court that last hears and decides
such suit, or after August 31, 1914, during any renewal of
this agreement; and that the Licensor shall charge royalties
or rents for the use of all exhibiting or projecting machines
capable of exhibiting or projecting motion pictures on film
of a width greater than approximately one (1) inch, con¬
taining the inventions, or any of them, described and claimed
in the aforesaid Letters Patent Nos. 578185, 580749, 58G953,
58891G, 673329, G73992, 707934, 722382, 744251, 770937,
771280, 785205, and 785237, licensed by the Licensor and
that all such royalties or rents shall be collected by the
Licensor, directly or indirectly from the exhibitors using such
machines, and shall be fixed by the Licensor and charged and
collected from such exhibitors by the Licensor at such a rate
as to average as nearly as possible a royalty or rental of
two dollars (52.00) per week for each such licensed machine
in use.

5. The Licensee further covenants and agrees not to sell
dr otherwise dispose of or offer for sale, in the “territory

ORIGINAL PETITION, EXHIBIT 3. G1

aforesaid,” unexposed positive or negative “licensed film”
during the continuance of this agreement; but this provision
shall not prevent the Licensee from selling as refuse, in the
“territory aforesaid,” second-hand positive or negative
motion pictures or motion pictures which have been used or
become shopworn or in any way damaged, to a manufacturer
or manufacturers of “licensed film” or to a manufacturer to
manufacture other articles than film therefrom, but only
after they have been rendered by the Licensee unsuitable for
use as motion pictures by cutting or otherwise defacing
them; or from selling exposed positive or negative film
(either waste or in rolls) known as “blank film” for use by
dealers, renters, or exhibitors for leaders or for spacing or
for similar purposes, but which shall not and can not be
otherwise employed for the exhibition of motion pictures.

G. The Licensee further covenants and agrees not to lease,
loan, rent out, sell or offer for sale, or otherwise dispose of in
the “territory aforesaid,” motion pictures to anyone pur¬
chasing or otherwise obtaining, leasing, using, loaning,
renting out, selling, offering for sale, or otherwise disposing
of or dealing in motion pictures containing the invention of
said reissued Letters Patent No. 12192, not the output of the
licensee or of the additional licensees hereinafter provided
for. .

7. The Licensee further covenants and agrees to mark
each and every camera which the Licensee may make or
use under this agreement embodying the inventions of
reissued Letters Patent No. 12037, Letters Patent Nos.
G290G3 and 707934, or either of them, with the word “Pat¬
ented” followed by the dates of grant of all of the said
letters patent, the inventions claimed in which are embodied
in the said camera or apparatus, and to photographically
print the Licensee’s trade-mark in each picture of at least
one scene of each subject of positive motion pictures on
film of a greater width than . approximately one (1) inch
manufactured by the Licensee and leased in the “lease
territory aforesaid,” and to mark conspicuously on the
labels which shall be placed on boxes or packages containing
positive motion pictures on film of a greater width than

G2 ORIGINAL PETITION, EXHIBIT 3.

approximately one (1) inch manufactured by the Licensee
in the “territory aforesaid,” with the following words and
figures :

LICENSED MOTION PICTCBE. ; ■

Manufactured and leased by and property of

(Patented in the United States August 31, 1S97; reissued
January 12, 1904).

The enclosed motion picture is leased only and upon the
following terms and conditions :

1. That the lessee shall not sell or otherwise dispose of '
the same outright, but shall have only the right to sublet
or use such motion picture.

2. That the lessee shall permit such motion pictures to be
exhibited only on motion picture projecting machines
licensed by the Motion Picture Patents Company of New
Jersey under its patents covering such projecting machines.

3. That the lessee shall not sublet such motion picture or
any other motion picture containing the invention of the

above reissued patent for use in any motion-picture exhibi- I

tions at a lower subrental price, directly or indirectly, than
that agreed upon (if any) in the contract of lease between the
lessee and the lessor of this picture.

4. That the lessee or user thereof shall not make or permit
others to make any reproduction, commonly known as a
“dupe,” of such motion picture or any other motion picture
containing the inventions of the above reissued patent.

5. That the lessee or user thereof shall not remove the
trade-mark or trade name or title therefrom.

0. That the violation of any of the foregoing conditions
entitles the lessor to immediate possession of this motion
picture without liability for any price which the lessee or
the person in whose possession it is found may have paid
therefor.

The Licensor further covenants and agreed to use all
possible diligence in licensing exhibiting or projecting
machines now in use in the “lease territory aforesaid”

ORIGINAL PETITION, EXHIBIT 3. 03

embodying any or all of the inventions described and claimed
in the said Letters Patent Nos. 578185, 580749, 58C953,
58891G, 673329, 073992, 707934, 722382, 744251, 770937,
771280, 785205, and 785237, and that royalties or rents from
the users of such exhibiting or projecting machines will not
be exacted, directly or indirectly, until February 1st, 1909.

8. The Licensee further covenants and agrees not to use,
in the production of negative or positive motion pictures,
under this agreement, the negative or positive motion
pictures (or reproductions commonly known as “dupes”
of the negative or positive motion pictures), of any other
manufacturer or person, firm, or corporation located either
in the “territory aforesaid” or in any foreign country,
whether the same have or have not been copyrighted in the
“territory aforesaid” or in any foreign country.

9. The Licensor has established the following scale of mini¬
mum prices (which the Licensee admits is a fair and reasona¬
ble one) for the lease of positive motion pictures on film of a
greater width than approximately one (1) inch in the “lease
territory aforesaid” embodying the invention of said
reissued Letters Patent No. 12192:

hist . 13 cents per running foot.

Standing order. . 11 cents per running foot.

Films leased between two andfour months aftor release

Films leased between four and six months after release

date... . 7 cents per running foot.

Films leased over six months ofter release date . 5 cents per running foot.

The Licensor and Licensee further mutually covenant
and agree that the above scale of minimum prices is to remain
in force until a new scale of prices is adopted, each such
new scale to: be adopted, during the continuance of this
agreement, by a majority vote to be forthwith communi¬
cated to the Licensor of the Licensee and the several addi¬
tional licensees hereinafter provided for, or such of them ns
may at the time be licensees on the basis of one vote for
each thousand running feet of new subjects on film of a
greater width than approximately one (1) inch offered for
lease or sale in the “territory nforesnid” by ench licensee
.during the year preceding the taking of such vote; anil
55498 -12-—9

. - . . . -i.

G4 ORIGINAL PETITION, EXniBIT 3.

they further covenant and agree that any changes which
may hereafter be so made and communicated to the Licensor
in said scale of prices, and of which the Licensee shall be
notified in writing by the Licensor, shall be accepted and
adopted by the Licensee in the place and stead of the scale
of prices above given or of any substitute or substitutes
therefor adopted prior to such change. It is, however,
expressly mutually covenanted and agreed that in no case shall
such new scale of prices, either list or standing order, be
less than nine (0) cents per running foot for any motion
picture leased within four months of the date of release of
the said motion picture.

By the expression “running feet of new subjects” above
referred to, and hereafter used, the parties hereto mean
the aggregate amount ascertained by adding together the
individual number of running feet of one print of each and
every new motion picture on film of a greater width than
approximately one (1) inch, regularly listed and offered for
lease in the “lease territory aforesaid.”

The Licensor and Licensee further mutually covenant and
agree that in case, during the continuance of this agreement,
there should be for any reason only three such licensees, i

then, and in such case, the Licensor may adopt a minimum
scale of prices in the place and stead of the minimum scale of
prices above given or of any substitute or substitutes there¬
for adopted in the manner above provided, which, however,
shall in no case be above the minimum scale of prices that
may be in force at the time the Licensor adopts the said new
minimum scale of prices, which said new minimum scale of
prices shall be binding upon the Licensee, but only after
receiving notice thereof in writing from the Licensor.

10. The Licensor and Licensee further mutually covenant
and agree that an order in the “lease territory aforesaid,”
for one or more positive motion pictures of each and every
new subject made by the Licensee (except clirono-photo-
graphic subjects and other special subjects that are an¬
nounced and advertised as special by the Licensee and of
which no copy or print is leased by the Licensee for less than
list price within two (2) months' after release date) when

ORIGINAL PETITION, EXUIBIT 3. Go

offered for lease in the regular order of business, shall con¬
stitute a “standing order” within the meaning of the scale of
prices aforesaid or any substitute therefor hereafter adopted,
said standing order to remain in force for not less than four¬
teen (14) consecutive days; and the parties hereto further
mutually covenant and agree that the minimum price at
which any additional positive motion pictures shall be leased,
in the “lease territory aforesaid,” subsequent to the filling
of a standing order, shall be the same per running foot as the
pictures furnished on such standing order, unless otherwise
provided for in the scale of prices aforesaid or any substitute
therefor hereafter adopted. All positive motion pictures
which, may be hereafter leased in the “lease territory afore¬
said,” to persons not having a standing order, as above
defined, shall in every case be leased at not less than the list
price mentioned in said scale of prices or any substitute
therefor hereafter adopted, except it be otherwise provided
by a majority vote of the Licensee and the several additional
licensees hereinafter provided for, or such of them as may
at the time be licensees, on the basis of one vote for each
thousand running feet of new subjects, on film of a greater
width than approximately one (1) inch, offered for lease or
sale in the “territory aforesaid” by each licensee during the
year preceding the talcing of such vote, and except as pro¬
vided for in paragraph 12 as to “special motion pictures.”

11. The Licensor and Licensee further mutually covenant
and agree that positive motion pictures made by or for the
Licensee and unsold prior to the date hereof, shall be subject
to. the scale of prices aforesaid and shall be leased in the
‘Hease territory aforesaid” at not less than the prices fixed
in said scale for positive motion: pictures as provided 'for in
paragraphs 9 and 10.

12. The Licensor and Licensee further mutually covenant '
and 'agree that in the case of so-called “special motion pic-

Etures” (where it is ngreed by the Licensee that the negative
shall lie the exclusive property of the person ordering the
same, although remaining in the care and i custody of the'
Licensee, and where positive prints therefrom shall be made
from time to lime on the order of such person), the price to

6G OHIO INAL PETITION, EXHIBIT 3.

be paid for the making of sncb negative in the “territory
aforesaid” shall not be less than one dollar- ($ff) per running
foot, and that the price at which positive prints therefrom
shall he leased in the “territory aforesaid,” shall not be less
than fifteen (15) cents per running foot

13. The Licensee further covenants and agrees not to lease
motion pictures in the “lease territory aforesaid,” under any
circumstances, either directly or indirectly, during the con-
tinuance of this agreement, at lower prices than those fixed
and 1C2StnWislled as provicle(1 for in paragraphs 0, 10, 11,

14. It is further and mutually covenanted and agreed by
the Licensor and Licensee that the Licensee shall have the
right to sell motion pictures in or for “said export territory,”
and that the prices above referred to in paragraphs 0, 10 11
and 12, or any substitute or substitutes for the same hereafter
adopted, shall not apply to sales or shipments of motion
Pictures made bona fide for export, when the goods, addressed
to the purchaser, agent, or consignee, are delivered to the
vessel or to a transportation company for transportation to

said export territory,” and not otherwise.

The Licensor and Licensee further mutually covenant and
agree that in no case shall sales “for export” of motion pic¬
tures be knowingly made by the Licensee to persons, firms
or corporations whom such Licensee has reason to believe
sale rr tllem int° tIla <<lea8e tepritol7 aforesaid” for

15. The Licensor and the Licensee further mutually

covenant and agree that, except as provided for in para¬
graph 5, the Licensee will not sell or lease, or offer for sale
or lease m the “territory aforesaid” at reduced prices,
second-hand motion pictures or motion pictures which have
damaged ^ ^ bGC°me Sh°P'Vorn or “ any way

16. The Licensor and the Licensee further mutunllv

covenant and agree that in the 'dense territoiy aforesaid ”
all leases of positive motion pictures shall be at the prices
hereinbefore provided for, without the allowance of an? dis-
counts or rebates or other reduction (except such as may he

ORIGINAL PETITION, EXHIBIT 3. 67

adopted by the unanimous votes of all the licensees) by which
a lessee might acquire positive motion pictures at lower
prices than those set forth in Paragraphs 9, 10, 11, and 12,
or any substitutes therefor hereafter adapted, and that the
Licensee will not dispose of such positive motion pictures os
premiums, or by lottery, or raffle, or any game of chance,
or in any way whereby they may be acquired directly or
indirectly for less than the prices set forth in paragraphs 9,
10, 11, and 12, or substitutes therefor.

The Licensee further covenants and agrees that, in the
“lease territory aforesaid,” the Licensee will not sell or offer
for sale other goods or merchandise at less than current
prices in order to induce the lease of positive motion pictures,
nor present or donate other goods or merchandise or prizes,
or make use of credit cards or trading stamps, or offer any
premiums of any kind whatsoever to induce the lease of
such positive motion pictures.

17. It is further mutually covenanted and agreed by and
between the Licensor and Licensee that no lease of positive
motion pictures on film of a greater width than approxi¬
mately one (1) inch shall be made in the “lease territory
aforesaid” by the Licensee, except upon and subject to the
following terms and conditions, the substance of which (with
the exception of the condition as to the return of positive
motion pictures hereinafter referred to) shall be expressed
in a printed notice on the labels, as provided for in para¬
graph 7, accompanying each positive motion picture, namely :
(l).That the lessee of such positive motion picture shall not
sell or otherwise dispose of the same outright, but shall only
have the right to use such positive motion picture in giving
motion-picture exhibitions in machines licensed by the
Licensor under the said letters patent Nos. 578185, 580749,
5S6953, 5SS916, G73329, 673992, 707934, 722382, 744251,
770937, 771280, 785205, and 785237, or one or more of them,
or under any other letters patent that it may hereafter
acquire or control, or to sublease such motion picture for
use in such machines, and that (2) the lessee shall not make
or permit others to make any reproduction commonly known
ns a “dupe” of such positive motion picture or any other

ORIGINAL PETITION, EXHIBIT 3.

positive motion picture containing the invention of said
reissued letters Patent No. 12192, or (3) sublease the same
or any other positive motion picture on film of a greater
width than approximately one (1) inch containing the inven¬
tion of said reissued Letters Patent No. 12192, for use in
giving motion-picture exhibitions at a lower lease price
directly or indirectly than that prescribed by the Licensee
at the time of the lease of such motion picture, and (4) that
the lessee of such positive motion picture shall not remove
the trade mark or trade name or title therefrom, and (5) that
the lessee shall return to the Licensee from whom such posi¬
tive motion picture has been leased (without any payment
therefor except the transportation charges incident to the
return of the same) on the first day of every month, begin¬
ning with February 1, 1909, an amount of positive motion
pictures (on film of a greater width than approximately one
(1) inch) in running feet ' (not " leased by the Licensee over
six months before) and of the make of 'the licensee, to whom
it is returned, equal to the amount that was so'leascd during
the sixth month preceding the date of each such return;
with the exception, however, that where any such positive
motion pictures are destroyed by fire or lost in transportation,
and proof satisfactory to the Licensee is furnished as to such
destruction or loss, the amount so destroyed or lost shall be
deducted from, the amount to be returned, as aforesnid.

It is further mutually covenanted and agreed by and be¬
tween the Licensor and Licensee that the subleasing price
aforesaid; for subleasing of positive motion pictures, on film
of a greater width than approximately one (1) inch, shall he
Axed (and which may be changed in the same manner during
the continuance of this agreement, ns may also the fifth con-'
dition before recited .in this paragraph) by a majority vote
of the Licensee and the several additional licensees hereinafter
provided for or such of them as may at the time be licensees,
on the basis of one vote for each thousand running feet of new
subjects, on film of a great* width than approximately one
(1) .inch, offered for lease;* sale in the “tereitnry aforesaid”'
the year1 preceding the .'taking of
such vote. . • ■*'.

OBIQINAL POTITION, EXHIBIT 3. G9

The Licensee further covenants and agrees that in the
“lease territory aforesaid” the Licensee will not discriminate
in favor of any lessee, or place upon any motion pictures any
restrictions other than those specified in this paragraph and
paragraph 7 hereof, unless authorized by a majority vote of
the Licensee and the several additional licensees hereinafter
: provided for, or such of them as may at the time bo licensees.

18. The Licensee covenants and agrees that in the “lease
territory aforesaid” the Licensee will dispose of the positive
motion pictures, on film of a greater width than approxi-
,! mately one (1) inch, manufactured, produced, or printed by

the Licensee, only by the sale “for export,” and shipment
i thereof into “said export territory” or by the lease thereof

to others for the purpose only of either subleasing the same
to persons, firms, or corporations using such motion pictures for
giving exhibitions thereof in exhibiting or projecting machines
licensed by the Licensor containing the inventions, or some of
J them, described and claimed in said Letters Patent Nos.

hi 578185, 580749, 580953, 588910, G73329, G73992, 707934,

t,{ 722382, 744251, 770937, 771280, 7S5205, and 785237, or in

letters patent herenfter acquired or controlled by the Licensor,
or of using the same in such machines so licensed ; nnd will not
use the same for the purpose of giving exhibitions thereof for
profit, directly or indirectly; it being expressly understood
nnd agreed by and between the Licensor and Licensee, how¬
ever, that the Licensee shall be at liberty to give exhibitions
of such positive motion pictures without profit, directly or
indirectly, and to possible or prospective lessees or pur¬
chases thereof; and the Licensee further covenants and
agrees not to knowingly allow positive motion pictures, on
film 'of-'a greater width than approximately one (1) inch,
manufactured by the Licensee under this agreement, to be
leased for use with any exhibiting or projecting machine not
licensed by the Licensor under the letters patent mentioned
in this paragraph, and that it may hereafter acquire or control,
or one dr more of them, except by and with the consent of the
Licensor; and also to refrain from supplying ; such motion
pictures manufactured ' or imported under this agreement,
for use with any exhibiting or projecting machine the

TO ORIGINAL PETITION, EXHIBIT 3.

license for which, under the aforesaid letters patent, or one
or more of them, has been terminated, and the Licensee has
been notified thereof by the Licensor; and also to refrain
from supplying such motion pictures manufactured and im¬
ported under this agreement to any lessee who may sublet
such motion pictures to persons, Arms, or corporations using
the same for giving exhibitions thereof in exhibiting or
projecting machines not licensed by the Licensor as afore¬
said, or the license for which has been terminated and the
Licensee has been notified by the Licensor that any such
lessee continues to so sublet such motion pictures after being
notified by the Licensor not to do so; and the Licensor
covenants and agrees to promptly notify any such lessee
who may so sublet such motion pictures, after it has knowl¬
edge of any such subletting, and to notify the Licensee and
the additional licensees hereafter provided for, or such of
them os may at the time be licensees, of the termination of
any license for the use of any exhibiting or projecting ma¬
chines under the aforesaid letters patent, or any of them, and
of any such lessee who may so sublet such motion pictures,
after being notified by it not to do so, nnd to compel nil such
additional licensees to refrain from supplying motion pic¬
tures for use with any such exhibiting or projecting machine
the license for which lias been so terminated, or to any such
lessee.

19. The Licensor and Licensee further mutually covenant
and agree that the Licensor shall and will, during the con¬
tinuance of this agreement, promptly institute suits against
any and all infringers of the letters patent, or any of them,
mentioned in this agreement, on the request of a majority of
the licensees, including the Licensee and the several additional
licensees hereinafter provided for, or such of them as may
at the time be licensees, nnd will thereafter diligently prose¬
cute any such suit or suits to final hearing and decision;
all expense connected with the institution and prosecution
of such suit or suits to be borne by the Licensor, who shall
also be entitled to receive and apply to its own use 'all
recoveries had therein for damages nnd profits.

ORIGINAL PETITION, EXHIBIT 3. 71

The Licensor and Licensee further mutually covenant
and agree that if in case any such suit is brought upon said
reissued Letters Patent Nos. 12037, 12192, or said Letters
Patent Nos. 58G953 or 722382, either of the claims of said
reissued Letters Patent No. 12192 or either of the first, sec¬
ond, or third claims of said reissued Letters Patent No.
12037, or any of the claims in issue in any such suit upon said
Letters Patent Nos. 580953 or 722382, is or are held invalid
by a court that last hears and decides such suit, or should
be held by such court not to be infringed, then, and in any
such case, the Licensee may at once terminate this agreement
and the license thereby granted, by giving notice of its elec¬
tion so to do to the Licensor.

The Licensor and Licensee further mutually covenant and
agree that the Licensor may, at its own expense (except as
hereinafter provided), during the continuance of this agree¬
ment, institute and prosecute suits against any of the several
additional licensees hereinafter provided for, for any breach
or violation on the part of any such licensee of the covenants
respecting prices at which positive motion pictures shall be
leased in the '‘lease territory aforesaid,” and also for viola¬
tion of any of the other terms, conditions, or stipulations
entered into by such licensee; that the Licensor shall at the
end of each year, counting from the day and year first above
written, render to the Licensee and the other licensees here¬
inafter provided for, or such of them as may at the. time he
licensees, a statement in writing showing in detail all legal
expenses incurred by it during such year in the prosecution
of such suit or suits; and that up to, but not exceeding, the
sum of twenty thousand dollars ($20,000) for any such year,
all such legal expenses, in so far as they may bo reasonable
and proper, shall be borne and paid by the Licensee nnd the
several additional licensees hereinafter provided for, pro rata
according to the number of thousand running , feet of new
subjects, offered for lease by each relatively to the total num¬
ber of thousand running feet of new subjects, on film of a
greater width than approximately one (1) inch, offered for
lease or sale by. all in the “territory aforesaid,” during the
year preceding the rendition of such statement, nny legal
65498-12 - 10

ORIGINAL PETITION, MX III HIT 3.

expenses in excess of said twenty thousand dollars (§20,000)
during any such year to be borne and paid by the Licensor
unless the Licensor and the Licensee and the several addi¬
tional licensees hereinafter provided for should hereafter
mutually agree otherwise.

20. It is mutually covenanted and agreed by and between
the Licensor and Licensee that the Licensor may grant other
licenses under said reissued Letters Patent Nos. 12037 and
12192 and said Letters Patent Nos. 029063 and 707934, so
far as the use of the inventions thereof in cameras is con¬
cerned, said licenses to be in writing and not to exceed nine
in number, seven to be to the persons and corporations men¬
tioned in paragraph c as having license agreements with the
Edison Company, one to the Edison Company, and one to
George Kleine, of Chicago, Illinois (except by a majority vote
of the Licensee and the nine other licensees, or such of them
as may at the time be licensees, on the basis of one vote for
each thousand running feet of new subjects, on film of a
greater width than approximately one (1) inch, offered for
lease or sale in the “territory aforesaid” by bucIi licensees
during the year preceding the taking of such vote), and not
to he granted or continued upon terms, conditions, or stipula¬
tions which are in any respect more favorable to the licensees
named therein than those set forth in this agreement (except
to the Edison Company, and it shall only be more fnvornble
to it in the matter of the payment of royalties to the Licensor),
and in the case of the license to George Kleine it shall be so
restricted ns to prohibit said Kleine from manufacturing neg¬
ative motion pictures in “the territory aforesaid,” and from
manufacturing from imported negative motion pictures posi¬
tive motion pictures, and importing positive motion pictures
in all more than three thousand "running feet of new sub¬
jects” per week: Provided, however, That if anv of such addi¬
tional nine licenses should be terminated during the contin¬
uance of this agreement, then nnd in each such case the
Licensor may grant a license in writing to some other motion-
picture manufacturer, hut not on terms, conditions, or stipu¬
lations which nre more favorable ns to such new licensee than
those set forth in this agreement.

ORIGINAL PETITION, EXHIBIT 3. 73

It is further mutually covenanted and agreed by and
between the Licensor and the Licensee that the Licensor
will, during the continuance of this agreement, license such
a number of persons, firms, or corporations under said
Letters Patent Nos. 5781S5, 5S0749, 586953, 588916, 673329,
673992, 707934, 7723S2, 744251, 770937, 771280, 785205,
and 785237, to make and sell exhibiting or projecting ma¬
chines containing the inventions described and claimed in
the same, capable of exhibiting or projecting motion pictures
on film of a width greater than approximately one (1) inch,
and also such machines not capable of exhibiting or project¬
ing motion pictures on film of a greater width than approx¬
imately one (1) inch, ns will he able to supply the demand
for the same; and that it shall not, and it hereby covenants
and agrees that it will not, during the continuance of this
agreement, license any person, firm, or corporation under said
letters patent dr any of them to make or sell any sncli
exhibiting or projecting machine containing any of the
inventions described and claimed in said letters patent, and
capable of exhibiting or projecting motion pictures on film
of a width greater than approximately one (1) inch, except
upon the conditions and restrictions that the sale and pur¬
chase of such machine gives only the right to use it solely
for exhibiting or projecting motion pictures containing the
inventions of said reissued Letters Patent No. 12192 leased
by a licensee of the Licensor, while it owns or controls the
letters patent under which such machine is licensed and
upon other terms to be fixed by the Licensor while in use,
and while the letters' patent under which it is licensed are
owned or controlled by' the Licensor (which other terms shall
only be the payment of a royalty or rental to the Licensor
while' in use, as hereinbefore provided for), nnd that there
shall be attached to each such machine, in a conspicuous
place, a plate, which is not to be removed therefrom; showing
plainly not only the dates of the letters patent under wliich
it is licensed, but also the aforesaid ’conditions' or' restriction’s.

The Licensor further covenants and agrees that it will
not charge any such person, firm, or corporation manu¬
facturing and selling any such machine capable of exhibit-

1 4 ORIGINAL PETITION, EXHIBIT 3.

ing or projecting motion pictures on a film of a width greater
than approximately one (X) inch, more than five dollars
(?5) as a license fee for the sale of each such exhibiting
or projecting machine sold by any such person, firm, or
. corporation.

The Licensor further covenants and agrees that it will not
license any person, firm, or corporation to make or sell
any exhibiting or projecting machine containing any of the
inventions described and claimed in the aforesaid letters
patent which is not capable of exhibiting or projecting
motion pictures on film of a width greater than approxb
inately one (1) inch, except upon the conditions and restric¬
tions that such machine bo used solely for exhibiting or
projecting motion pictures on film not wider than approxi¬
mately one (1) inch, in places where no admission fee is
charged, and that there shall be attached to each such
machine in a conspicuous place, a plate, which is not to be
removed therefrom, showing plainly, not Duly the dates .of
the letters patent under which it is licensed, but also the
aforesaid conditions or restrictions, and that the Licensor
will not charge to any person, firm, or corporation making
or selling any such machine a license fee of more than 5 per
cent of the net retail selling price of each such machine.

The Licensor further covenants and agrees that it will grant
a license to the Licensee, upon its request, to manufacture
and sell exhibiting or projecting machines under the letters
patent, and upon the condition as to the payment of the
license fees or royalties and the other conditions and restric-
tions, as provided for in this paragraph, and will also grant
similar licenses upon the same conditions as to the payment
of the license fees or royalties and the other conditions and
restrictions, to such of the additional licensees hereinbefore
provided for who may request the same, except that the said
American Mu toscope & Biograph Company is not to pav any
such license fees or royalties ; and will also grant a license to the
Licensee and any such additional licensees who mav request

imder™ ^ °r Projecting machines

under any other letters patent and containing the inventions
described and claimed therein that the Licensor may here-

ORIGINAL PETITION, EXHIBIT 3.

after acquire or control, upon the payment of additional
license fees or royalties to be fixed by the Licensor, and sub¬
ject to similar conditions and restrictions and the placing
upon the machines of plates containing such conditions and
restrictions as are provided for in this paragraph respecting
exhibiting or projecting machines made and sold under the
letters patent now owned by the Licensor mentioned in this
paragraph, the royalty or license fee, and all other conditions
and restrictions of such last-named licenses to be the same
for the Licensee and such other licensees.

It is mutually covenanted and agreed, however, by and
between the Licensor and Licensee that the Licensor shall
linve the right to grant, and that it will grant, licenses to
persons, firms, and corporations upon their request (includ¬
ing the Licensee) to manufacture and sell exhibiting or pro¬
jecting machines containing the inventions described and
claimed in the aforesaid letters patent now owned by the
Licensor, capable of exhibiting or projecting, by reflected
light, animated pictures on film of any width, but not
capable of exhibiting or projecting the same by transmitted
light, upon the payment of a royalty or license fee hot to
exceed 5 per cent of the net retail selling price of each such
machine, and upon the condition that they be used only in
places where no admission fee is charged, which condition
shall appear on a plate to be attached to each such machine;
and also that it will grant licenses to such persons, firms, and
corporations to manufacture and sell such exhibiting or pro¬
jecting machines containing the inventions described and
claimed in any letters patent that the Licensor' may here¬
after own or control, subject to similar conditions or restric- .
tions and' upon the payment of additional license fees or
royalties to be fixed by the Licensor; the royalty or license
fee, and all the conditions and restrictions of all such licenses,
to be the same for the Licensee and such other licensees,

20n. It is further mutually covenanted and agreed by
and between the Licensor and Licensee that in case' the
Licensor should be notified by the Licensee or it should
otherwise come to its knowledge that any sucli additional

76 ORIGINAL PETITION, EXHIBIT 3.

Licensee has knowingly or through gross neglect or careless¬
ness broken, violated, or failed to perforin any of the terms,
conditions, or stipulations of the license granted by the
Licensor, resulting in substantial injury to the Licensor, or
the Licensee or the additional Licensees aforesaid, the Licen¬
sor will promptly notify such Licensee in writing of such
breach, violation, or nonperformance, and if such Licensee
should, for a period of forty (40) days after such notice,
persist in or fail to correct, repair, or remedy the same, the
Licensor shall at once terminate the license to such Licensee;
and that in case any such Licensee should be guilty of a
second grossly neglectful, careless, or knowing breach,
violation, or nonperformance of such terms, conditions, or
stipulations, resulting in substantial injury to the Licensor,
or the Licensee or the additional Licensees aforesaid, then,
and in such case, the Licensor shall terminate the license
to such Licensee by giving the latter thirty (30) days’ notice
in writing of its intention so to do.

206. The Licensor and Licensee further mutually covenant
and agree that by the expression “motion pictures,” as
used in the foregoing agreement, is meant transparent or
translucent tape-like film having photographs thereon of
objects in motion.

21. It is further mutually covenanted and agreed by and
between the Licensor and Licensee that unless sooner
terminated, as hereinbefore or hereinafter •provided, this
agreement and the license granted thereby shall take effect
January 1, 1909, and shall continue until June 20, 1910, but
that the Licensee may renew this agreement and license
thereafter from year to year upon the same terms, condi¬
tions, and stipulations as herein provided, by giving notice
to the Licensor on or before April 20 of each year, beginning
with the year 1910, of the Licensee’s election to so renew
this agreement and license, and upon the giving of each
such notice this agreement and the license thereby granted
shall be considered and treated by the Licensor and Licensee
as renewed for a period of one year, beginning June 20 of
the year following such notice, except that the last renewal

OniGINAL PETITION, EXHIBIT 3. 77

period shall be for the period from June 20, 1914, to August
2G, 1919, the date of expiration of the Letters Patent No.
707934.

It is further mutually covenanted and agreed by and
between the Licensor and Licensee that if, during said original
term or during any such renewal period, either party should,

■ knowingly or through gross neglect or carelessness, be guilty

of a breach, violation, or nonperformance of its covenants,
$, conditions, and stipulations, resulting in substantial, injury

:J to the other party, and should, for the period of forty (40)

; flays after notice thereof from the other party, persist therein

%. or fail to correct, repair, or remedy the same, then and in such

3| case the party aggrieved may terminate this agreement by

| giving notice in writing to the guilty party of its intention

:;'i. so t0 do. It is, however, mutually covenanted and agreed

I by and between the Licensor and Licensee, that if the guilty

H party should correct, repair, or remedy such breach, violation,

: or nonperformance of its covenants, conditions, and stipula-

| tions within the said period of forty (40) days after such

§ notice, and should thereafter knowingly or through gross

h neglect or carelessness be guilty of a second breach, violation,

<1 or nonperformance of its covenants, conditions, and stipula¬

tions, resulting in substantial injury to the other party, then
and in such case, the party aggrieved may terminate this
J agreement by giving thirty (30) days’ notice in writing to the

guilty party of its intention so to do. Such termination of
I the agreement, however, shall not prejudice cither party

\ hereto in the recovery of damages because of any such breach,

| violation, or nonperformance by the other party hereto,

f 22. All notices provided for in this agreement shall be in

writing and shall be given by delivering the same to the
Licensor or Licensee, ns the case may be, or to an officer of
the Licensor or Licensee, ns the case may be, or by depositing
such notice, postage prepaid, in any post office of the United
States, in a. sealed envelope directed to the Licensor or the
Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

23. It is mutually covenanted and agreed by and between
the Licensor and Licensee that after notice of the termination

78 ORIGINAL PETITION, EXHIBIT 3.

of this agreement and the license granted thereby by either
party, as provided for in paragraphs 19 and 21 of this agree¬
ment, and after the same have been terminated, no matter
wlmt the cause or manner of termination may be, neither
this license agreement, nor the fact that the Licensee has
entered into or acted under it, shall be used in any manner,
directly or indirectly, by or for the Licensor, its successors,
assigns, or legal representatives, or by or for others with its
or their consent or permission, against the Licensee, or the
Licensee’s successors or legal representatives, in any litiga¬
tion, controversy, or proceeding involving the Licensee or
them or any other persons, Arms, or corporations, or in any
other way, it being understood and agreed that upon such
termination the positions and rights of the Licensor and
Licensee shall he the same as if this agreement had not been
made; provided, however, that the rights of neither party
shall be prejudiced by such termination in the recovery of
damages for any breach or other violation of this agreement
by the other occurring prior to such termination.

In witness whereof the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above'written.

[seal.] Motion Picture Patent Company,

By Prank L. Dyer, President.

— Attest:

GrEonaE P. Scull, Secretary.

[seal.] American Mutoscope and Biograph Company,
By J. J. Kennedy, President.

Attest :

W. H. BRUENNEn, Secretary.

Exhibit 4.

Form of License Agreement Between motion
Picture Patents Company and the Rental
Exchanges.

EXCHANGE LICENSE AGREEMENT.

Whereas the Motion Picture Patents Company, of New
York City (hereinafter referred to as the “Licensor”) is the
owner of all the right, title, and interest in and to reissued
Letters Patent No. 12192, dated January 12, 1904, granted to
Thomas A. Edison for kinetoscopic film, and also Letters
Patent Nos. 578185, 680749, 58G953, 588916, G73329, 673992,
707934, 722382, 744251, 770037, 771280, 785205, and 785237,
for inventions relating to motion picture projecting machines;
and

Whereas the Licensor has licensed the American Muto¬
scope and Biograph Company, of New York City; the Edison
Manufacturing Company, of Orange, New Jersey; the Essa-
nay Company, of Chicago; the Kalem Company, of New York
City; George Kleine, of Chicago; Lubin Manufacturing Com¬
pany, of Philadelphia; Pathe Preres, of New York City; the
Selig Polyscope Company, of Chicago; and the Vitagraph
Company of America, of New York City (hereinafter referred
to as "Licensed Manufacturers or Importers”), to manufac¬
ture or import motion pictures under said reissued letters
patent and to lease licensed motion pictures (hereinafter
referred to as “Licensed Motion Pictures”) for use on pro¬
jecting machines licensed by the Licensor; and

Whereas the undersigned (hereinafter referred ' to as the
“Licensee”), desires to obtain a license under said reissued
Letters Patent No. 12192, to lease from the Licensed Manu¬
facturers and Importers licensed motion pictures and to sublet
the said licensed motion pictures for use on projecting
machines licensed by the Licensor;

55498-12 —11 79

— - • - 1

ORIGINAL PETITION, EXHIBIT 4.

Now, therefore, the parties hereto, in consideration of
the covenants herein, have agreed as follows:

(1) The Licensor hereby grants to the Licensee for the
term and subject to the conditions expressed in the "Con¬
ditions of license” hereinafter set forth, the license, under
the said reissued Letters Patent No. 12192, to lease licensed
motion pictures from the Licensed Manufacturers and
Importers and to sublease said license motion pictures
for use only on projecting machines licensed by the Licensor
under letters patent owned by it.

(2) The Licensee covenants and agrees to conform with
and strictly adhere to and be bound by all of the “Condi¬
tions of license,” hereinafter set forth, and to and by any and'
all future changes in or additions thereto, and further agrees
not to do or suffer any of the acts or things thereby pro¬
hibited, and that the Licensor may place and publish the
Licensee’s name in its removal or suspended list in the event
of the termination of this agreement by the Licensor, or in
case of any violation thereof, and may direct the Licensed
Manufacturers and Importers not to lense licensed motion
pictures to the Licensee, the Licensee hereby expressly
agreeing that such Licensed Manufacturers and Importers
shall have the right to cease such leasing when so directed
by the Licensor; and the Licensee further ngrecs that the
signing of this agreement constitutes a cancellation of any or
all agreements for the sale of licensed motion pictures made
prior' to this agreement by and between the Licensee and
any or all licensed manufacturers or importers, except as
to any clause in said agreements relating to the return of
motion-picture film to the several licensed manufacturers
or importers. It is further understood nnd agreed by. the
Licensee that the license hereby granted is a personal one
and not transferable or assignable, and the Licensee hereby
recognises and acknowledges the validity of the said reissued
Letters Patent No. 12192.

; CONDITIONS OF LIOENSE.

1. Prom the date of this agreement the Licensee shall not
buy, lease, rent, or otherwise obtain any motion pictures
other than licensed motion pictures and shall dispose of any
motion pictures only by the subleasing thereof under the
conditions hereinafter set forth.

i 2. The ownership of each licensed motion picture leased

under this agreement shall remain in the Licensed Manu-
Vj facturcr or Importer from whom it may have been leased,

■;'[ the Licensee, by the payment of the leasing price acquiring

only the license to sublet such motion picture subject to the
Srf conditions of this agreement. Such license for any motion

i S picture shall terminate upon the breach of this agreement

<1 in regard thereto, and the Licensed Manufacturer or Importer

■;?* from whom it may have been leased shall have the right to

:.i immediate possession of such motion picture, without

•%j liability for any leasing price or other sum which the Licensee

or the person in whose possession said motion picture is found
Op may have paid therefor.

3. The Licensee shall not sell nor exhibit licensed motion
pictures obtained from any Licensed Manufacturer or
- !- Importer, either in the United States or elsewhere, but shall

;; only sublet such licensed motion pictures and only for use
in the United States and its Territories and only to exhibitors
who shall exclusively exhibit licensed motion pictures, but
J in no case shall the exhibitor be permitted to sell or sublet

■ or otherwise dispose of said licensed motion pictures,

j 4. The lensing price to be pnid by the Licensee to the

Vi Licensed Manufacturers or Importers, or the terms of pny-

£ ment for or shipment of licensed motion pictures, shall in no

case be less or more favorable to the Licensee than that
i;j defined in the leasing schedule embodied in this agreement,

or any other substitute leasing schedule, which may be
regularly adopted by the Licensor, and of which notice shnll
J be given to the Licensee hereafter.

(| 5. To permit the Licensee to take advantage of any

j standing order lensing price mentioned in such schedule,

I such standing order with any Licensed Manufacturer or

S2 ORIGINAL PETITION, EXHIBIT 4.

Importer sliall be for one or more prints of each and every |

subject regularly produced, and offered for lease by such :.j

manufacturer or importer as a standing order subject and
not advertised as special by such Licensed Manufacturer or :j

Importer; and shall remain in force for not less than fourteen vj

(14) consecutive days. Any standing order may be canceled fj

or reduced by the Licensee on fourteen (14) days’ notice. S;

Extra prints in addition to a standing order shall be furnished ! j

to the Licensee at the standing order leasing price. .»

G. The Licensee shall not sell, rent, or otherwise dispose of, ,!

either directly or indirectly, any licensed motion pictures j]

(however the same shall have been obtained) to any persons, >

firms or corporations or agents thereof, who may be engaged [

cither directly or indirectly in selling or renting motion ;

picture films. :

7. The Licensee shall not make or cause to he made, or i

permit others to make, reproductions or so-called “dupes” j

of any licensed motion pictures, nor sell, rent, loan, or other- ;

wise dispose of or deal in any reproductions or “dupes” of

any motion pictures.

8. The Licensee shall not deliberately remove the trade¬
mark or trade name or title from any licensed motion
picture, nor permit others to do so, but in case any title is
made by the Licensee, the manufacturer’s name is to bo

placed thereon, provided that in making any title by the j

Licensee the manufacturer’s trade-mark shall not be repro¬
duced.

0. The Licensee shall return to each licensed manufacturer
or importer (without receiving any payment therefor, except
that the said Licensed Manufacturer or Importer shall pay the
transportation charges incident to the return of the same) on
the first day of every month commencing seven months from
the first day of the month on which this agreement is exe¬
cuted, an equivalent amount of positive motion-picture film
in running feet (not purchased or leased over twelve months
before) and of the make of the said Licensed Manufacturer
or Importer, equal to the amount of licensed motion pictures
that was so leased during the seventh month preceding the day
of each such return, with the exception, however, that where

ORIGINAL PETITION, EXHIBIT 4. 83

any such motion pictures are destroyed or lost in trans¬
portation or otherwise, and satisfactory proof is furnished
within fourteen (14) days after such destruction or loss,
to the Licensed Manufacturer or Importer from whom such
motion picture was leased, the Licensed Manufacturer or
Importer shall deduct the amount so destroyed or lost from
the amount to be returned.

10. The Licensee shall not sell, rent, sublet, loan, or other¬
wise dispose of any licensed motion pictures (however the
same may have been obtained) to any person, firm, or cor¬
poration in the exhibition business who may have violated
any of the terms or conditions imposed by the Licensor
through any of its licensees and of which violation the present
Licensee may have had notice.

11. The Licensee shall not sublease licensed motion pic¬
tures to any exhibitor unless a contract with said exhibitor
(satisfactory in form to the Licensor) is first exacted, under
which the exhibitor agrees to conform to all the conditions
and stipulations of the present agreement applicable to the
exhibitor; and in the case of an exhibitor who may operate
more than a single place of exhibition, a similar contract
shall be exacted in connection with. each place so operated,
and supplied with licensed motion pictures by the Licensee.

12. After February 1, 1909, the Licensee shall not sub¬
lease any licensed motion pictures to any exhibitor unless
each motion picture projecting machine on which the
licensed motion pictures are to be used by such exhibitor is
regularly licensed by the Motion Picture Patents Company,
and the license fees therefor have been paid; and the
Licensee shall, before supplying such exhibitor with licensed
motion pictures, mail to the Motion Picture Patents Com¬
pany, at its office in New York City, a notice, giving the
name of the exhibitor, the name and location of the place
of exhibition (and, if requested to do so by the Licensor, its
seating capacity, hours of exhibition, and price of admission,
and the number and make of the licensed projecting machine
or machines), together with the date of the commencement of
the subleasing, all in a form approved by the Licensor. The
Licensee, when properly notified by the Licensor that the

84 ORIGINAL PETITION, EXHIBIT 4.

license fees of any exhibitor for any projecting machine have
not been paid, and that the license for such projecting
machine is terminated, shall immediately cease to supply
such exhibitor with licensed motion pictures.

13. The Licensee agrees to order during each month
while this agreement is in force, for shipment directly to
the place of business of the Licensee in the city for which
this agreement is signed, licensed motion pictures, the net
leasing price for which shall amount to at least §2,500.

14. The Licensee shall, on each Monday during the con¬
tinuance of this agreement, make or mail payment to each
Licensed Manufacturer and Importer for all invoices for
licensed motion pictures which have been received by the
Licensee during the preceding week.

15. This agreement shall extend only to the place of busi¬
ness for the subleasing of motion pictures maintained by
the Licensee in the city for which this agreement is signed,
and the Licensee agrees not to establish or maintain a place
of business for the subleasing of motion pictures, or from
which motion pictures are delivered to exhibitors, in any
other city, unless an agreement for such other city, similar
to the present agreement, is first entered into by and between
the Licensee and the Licensor.

1G. The Licensor agrees that before licensing any person,
firm, or corporation in the United States (not including
its insular Jerritorinl possessions and Alaska) to lease licensed
motion pictures from Licensed Manufacturers and Impor¬
ters and to sublease such motion pictures it will exact from
each such Licensee an agreement similar in terms to the
present agreement, in order that all Licensees who may do
business with the Licensed Manufacturers- and Importers
will be plnced in a position of exact equality.

10. It is understood and specifically covenanted by the
Licensee that the Licensor may terminate this agreement
on fourteen (14) days’ written notice to the Licensee of its
intention so to do, and that if the Licensee shall fail ' to
faithfully keep and perform the foregoing terms and’ condi¬
tions of lease, or any of them, or shall fail to pay the leasing

ORIGINAL PETITION, EXHIBIT 4. 85

v price for any motion pictures supplied by any Licensed

Manufacturer or Importer when due and payable, according
to the terms of this agreement, the Licensor shall have the
right to place the Licensee’s name on an appropriate sus¬
pended list, which the Licensor may publish and distribute
to its other licensees and to exhibitors and to the Licensed
■4 Manufacturers and Importers and to direct the Licensed

Manufacturers and Importers not to lease licensed motion
•; pictures to the Licensee, and the exercise of either or both

of these rights by the Licensor shall not be construed ns a
>i termination of this license, and the Licensor shall also have

"i the right in such case, upon appropriate notice to the

;•$ Licensee, to immediately terminate the present license, if the

Licensor shall so elect, without prejudice to the Licensor’s
J-j right to sue for and recover any damages which may have

;s-f been suffered by such breach or noncompliance with the

terms and conditions hereof by the Licensee, such breach or
;|| noncompliance constituting an infringement of said reissued

ylj letters patent. It is further agreed by the Licensee that

S if this agreement is terminated by tlie'Licensor for nny breach

°f any condition hereof, the right to possession of all licensed
motion pictures shall revert, twenty days after notice of
i such termination, to the respective • Licensed Manufacturers

V and Importers from whom they were obtained and shall bo

sj returned to such Licensed Manufacturers or Importers at

;r once after the expiration of that period.

"i 20. It is understood that the terms and conditions of this

'•! license may be changed at the option of the Licensor upon

fourteen (14) days’ written notice to the Licensee, but no
y? such change shall be effective and binding unless duly ratified

' I by an officer of the Licensor.

;; Leasino rmers of Licensed Positive Motion Pictures.

Films leased between two and four months after release date.
Films leased between four and six months nftor release date. .
Films leased over six monthB after release date .

80 ORIGINAL PETITION, EXHIBIT 4.

A rebate of 10 per cent will be allowed on all leases of
licensed motion pictures, except at the 7-cent and 6-ccnt
prices, which are net; said rebates to bo due and payable
between the 1st and 15tli days of each of the months of
March, May, July, September, November, and January on
all films' leased during the two months preceding each said
period, provided all the terms and conditions of this license
agreement have been faithfully observed.

TERMS.

All shipments are made f. o. b. lessor’s office at lessee’s
risk. |

All motion-picture films are to be shipped to lessee’s office
only.

The lengths at which motion-picture films are listed and
leased are only approximate.

Motion Picture Patents Company,

By - , President.

Licensee’s signature, - .

Place of business for which this license is granted:

Street and No. - -

City - , State - .

;; Exhibit 5.

License Agreement Under the Exhibiting Ma¬
chine Patents, Between Motion Picture
Patents Company and Armat Moving
Picture Company.

5. (a) This agreement made this 7th day of January, 1909,

•V by and between the Motion Picture Patents Company, a cor-
poration organized and existing under the laws of the State
3 of New Jersey, and having an office at Jersey City, in said
$ State, party of the first part (hereinafter referred to as the

iSj “Licensor”), and Armat Moving Picture Company, a corpo-

ration organized and existing under the laws of the State of
West Virginia, and having an office at Washington, D. C.,
■4 party of the second part (hereinafter referred to as the
M “Licensee”) ;

(6) Whereas the Licensor represents that it is the owner
Si of the entire right, title, and interest in and to letters patent
:f of the United States :

No. 678185, dated March 2, 1897, for vitascope,
granted to Thomas Armat;

| No. 580749, dated April 13, 1897, for vitascope,

S' granted to Thomas Armat;

No. 680953, dated July 20, 1897, for phantoscope,
:1 granted to Charles P. Jenkins and Thomas Armat;

No. 588916, dated August 24, 1897, for kinetoscope,

! granted to Charles M. Campbell as the assignee of

Willard G-. Steward and Ellis P. Prost; .

No. 673329, dated April 30, 1901, for kinetoscope,
granted to the American Vitagraph Company , as
the assignee of Albert E. Smith ;

No. 673992, dated May 14, 1901, for vitascope, granted
to Thomas Armat;

No. 707934, dated August 26, 1902, for projecting
kinetoscope, granted to E. & H. T. Anthony & Co.,
as assignees of Woodville Latham ; ■■■■.• , t

65498 — 12- — 12 87

S8 ORIGINAL PETITION, EXHIBIT 5.

No. 722382, dated Starcli 10, 1903, for animated pic¬
ture apparatus, granted to American Mutoscope &
Biograpli Company as the assignee of John A.

No. 744251, dated November 17, 1903, for kineto-
scope, granted to Albert E. Smith;

No. 770937, dated September 27, 1904, for kineto-
scope, granted the Vitagraph Company of America

as the assignee of Albert E. Smith;

No. 771280, dated October 4, 1904, for winding reel,
granted Albert E. Smith ;

No. 785205, dated March 21, 1905, for flame-shield for
kinetoscopes, granted the Vitagraph Company of
America as the assignee of William Ellwood; and

No. 785237, dated March 21, 1905, for film-holder for
kinetoscopes, granted the Vitagraph Company of
America as the nssignee of Albert E. Smith ;
all of which said letters patent relate to improvements on
the motion-picture art, and that there are no outstanding
licenses, shop rights, or other rights under said letters
patent, or either of them, except a license for parlor kineto-
sco'pes, granted the Karmata Company, of Washington,
D. C., under Letters Patent Nos. 578185, 580749, 58G953,
and 673992, and certain alleged licenses under U. S. Letters
Patent No. 586953, which are in dispute, claimed to be
owned by the Edison Company* and the American Graplio-
phone Company, of Washington, D. O., and S. Lubin, of
Philadelphia, Pennsylvania; and excepting a license granted
by the American Mutoscope & Biograpli Company to the
firm of Marvin and Cnsler to manufacture and sell cameras
and exhibiting or projecting machines under letters patent
owned by it (some of which are hereinbefore referred to) for
use in foreign countries only and excepting Certain licenses
granted by the Licensee to tlic American Mutoscope & Bio¬
graph Company under Letters Patent Nos. 578185, 580749,
580953; 588919, and 079902, and by the American Mnto-
scopc 'ft Biograpli Company to the Licensee under patents
Nos. 707934 and 722382, which licenses are, however, by
agreement between said parties, suspended and are not to

OltIQINAL PETITION, EXHIBIT 6. 89

■1 be acted upon until the Licensor becomes bankrupt, ceases

.■! doing business or shall be dissolved voluntarily or other¬

wise, or its charter shall be repealed ; and

(c) Whereas the Licensor represents further that it is the
^ owner of the entire right, title, and interest in and to reissued

A Letters Patent of the United States Numbered 12192, dated

Si January 12, 1904, the original letters patent of which were

4 numbered 589108, and dated August 31, 1S97, nnd that it

vl* has granted licenses under the said reissued letters patent

V#' only to the following-named persons, firms, or corporations :
t§| American Mutoscope & Biograph Company of New

York City;

|3J Edison Manufacturing Company of Orange, N. J.;

Essanay Company of Chicago, Illinois;

I Kalem Company of New York City;

George Kleine of Chicago, Illinois;

Lubin Manufacturing Company of Philadelphia, Pa.;
Patlie Freres of New York City;

Selig Polyscope Company of Chicago, Illinois;

The Vitagraph Company of America of New York
City;

and that all of the said persons, firms, or corporations have
covenanted and agreed to lease only and not sell in the
IP United States, its Territories and possessions except its insular
J|§| possessions and Alaska (hereinafter referred to as the
“lease territory aforesaid”), motion picture films manu-
factored or imported by them, of a width greater than
sUf approximately one inch (1”), nnd under the condition and
restriction that the snid films shall be used only on exhibi¬
tion or projecting machines licensed by the Licensor undev
United States letters patent owned by the Licensor; and
(d) Whereas the Licensee is engaged in . the manufacture
and sale of motion picture exhibiting and projecting ma-
®j| chines, and relying upon the representation of the Licensor

SM and induced thereby, desires to obtain from the Licensor a

eft license under the said United States Letters Patent;

ti§| ( e ) Now, therefore, the parties hereto, for and in . con-

s||| siderntion of the sum of one dollar to each in hand paid by

ORIGINAL PETITION, EXHIBIT 5.

the other, and for other good and valuable considerations,
from each to the other moving, receipt of all of which is
hereby acknowledged, have agreed as follows :

(1) The Licensor hereby grants to the Licensee for the
term and subject to the covenants, conditions, and stipula¬
tions hereinafter expressed, the right and license for the
United States, its territories and possessions, to manufacture
and sell, motion picture exhibiting or projecting machines
embodying one or more of the inventions described and
claimed in the said United States Letters Patent Nos. 578185,
580749, 580953, 58891G, 073329, 073992, 707934, 7223S2,
744251, 770937, 771280, 785205, and 785237. The license
hereby granted is personal to the Licensee, and in the event
of the permanent discontinuance or retirement from business
of the Licensee for a period of six consecutive months, the
license hereby granted shall he immediately terminated.

' (2) The Licensor, for itself, its successors, assigns, and
legal representatives, hereby releases, acquits, and dis¬
charges the Licensee from any and all claims, demands, and
liability for profits and damages because of any infringement
by the Licensee of one or more of the said United States
Letters Patent Nos. 578185, 580749, 580953, 588916, 673329,
673992, 707934, 722382, 744251, 770937, 771280, 785205, and
785237, or use by the Licensee of the inventions covered
thereby.

(3) The Licensee hereby recognizes and admits the validity
of each and all of the said United States Letters Patent Nos.
' 578185, 580749, 580953, 588916, 673329, 073992, 707934,

722382, 744251, 770937, 771280, 785205, and 785237, and
the Licensee agrees hot to contest or question the same
during the continuance of this agreement.

(4) The Licensee covenants and agrees that on all motion
picture exhibiting or projecting machines containing one or
more of the inventions described and claimed in the said
United States Letters Patent Nos. 673329, 744251, 770937j
771280, 785205, and 785237, made in the United States, its
Territories and possessions, by the Licensee, and sold after
the license hereby granted shall take effect and during the

ORIGINAL PETITION, EXHIBIT 5. 91

continuance of this agreement, the Licensee will pay royalties
as follows:

On each such machine capable of exhibiting or projecting
by transmitted light, motion pictures on film of a width
greater than approximately one inch (1"), a royalty of one
dollar (?1).

On each such machine not capable of exhibiting or pro¬
jecting by transmitted light, motion pictures on film of a
width greater than approximately one inch (1"), a royalty
of three-fifths (3-5) of one (1) per cent of the net retail
selling price of such machines.

On each such machine capable of exhibiting or projecting
by reflected light motion pictures on film of any width, hut
but not capable of exhibiting or projecting the same by
transmitted light, a royalty of three-fifths (3-5) of one (1) per
cent of the net retail selling price of such machine.

It is understood and agreed by and between the Licensor
and the Licensee that the expression “motion picture exhib¬
iting or projecting machine,” as used hereinbefore or here¬
inafter, includes motion-picture mechanisms or “heads” for
such exhibiting or projecting machines, hut not any repair
parts or portions of such motion-picture mechanisms or
“heads.”

The Licensee further covenants and agrees that the
Licensee will, within fifteen (15) days after the last days of
the months of November, February, May, and August in
each year, after this agreement takes effect and during its
continuance, submit a statement in writing signed by the
proper officer of the Licensee, and sworn to if requested by
the Licensor, showing the number of exhibiting or projecting
machines of each of the classes provided for in this para¬
graph, embodying one or more of the inventions described
and claimed in the said United States Letters Patent Nos.
073329, 744251, 770937, 771.280, 785205, and 785237, sold
hy the Licensee during the three months ending with the
last days of the said months, and at the same time pay the
royalties due- thereon. The first such statement and pay¬
ment, however, shall he only for the period between Februaiy
1, 1909, and February 28, 1909. The Licensee further agrees

I s

92 ORIGINAL PETITION, EXHIBIT 5.

to keep accurate books of account and to permit the Licensor
to determine through Messrs. Price, Waterhouse & Com¬
pany, or any other reputable chartered accountants to be
agreed upon by the parties hereto, the number of such
exhibiting or projecting machines sold by the Licensee while
this agreement is in effect, if the Licensor should so desire.

(5) The Licensee further covenants and agrees that each
and every motion picture exhibiting or projecting machine
capable of exhibiting or projecting by transmitted light,
motion pictures on a film of a width greater than approxi¬
mately one inch (1"), and embodying one or more of the
inventions described and claimed in the said United States
Letters Patent Nos. 578X85, 580749, 586953, 588916, 673329,
673992, 707934, 722382, 744251, 770937, 771280, 785205’
and 785237 made in the United States, its territories or pos¬
sessions by the Licensee, shall be sold by the Licensee,
except when sold for export, under the restriction and
condition that such exhibiting or projecting machines,
shall be used solely for exhibiting or projecting motion
pictures containing the invention of reissued Letters Patent
No. 12192, leased by a Licensee of the Licensor while it
owns said patents, and upon other terms to be fixed by
the Licensor and complied with by the user while the said
machine is in use and while the Licensor owns snid patents
(which other terms shall only be the payment of a royalty
or rental to the Licensor while in use). The Licensor
further covenants and agrees that the Licensee will attach
in a conspicuous place to each and every such exhibiting or
projecting machine of the Licensee’s manufacture, sold by
the Licensee, except for export, after the date hereof, a
plate showing plainly not only the dates of the letters
patent under which the said machine is licensed, but also
the following words and figures :

Serial No :

Patented. No.

The sale and purchase of this machine gives only the
right to use it solely with moving pictures containing the
invention of reissued patent No. 12192, leased by a licensee

ORIGINAL PETITION, EXHIBIT 5. 93

of the Motion Picture Patents Company, the owner of the
above patents and reissued patent, while it owns said pat¬
ents, and upon other terms to be fixed by the Motion Pic¬
ture Patents Company und complied with by the user
while it is in use and while the Motion Picture Patents
Company owns said patents. The removal or defacement;
of this plate terminates the right to use this machine.

(6) The Licensee further covenants and agrees that each
and every motion picture exhibiting or projecting machine
not capable of exhibiting or projecting by transmitted light,'
motion pictures on a film of a width greater than approxi¬
mately one inch (1"), or capable of exhibiting or projecting
motion pictures on film of any width, but only with reflected
light, and embodying one or more of the inventions described
and claimed in the said Letters Patent Nos. 578185, 580749,
586953, 588916, 673329, 673992, 707934, 7223S2, 744251,
770937, 771280, 785205, and 785237; and made in the United
States, its Territories and possessions by the Licensee, shall
be sold by the Licensee, except when sold for export, under the
restrictions and condition that the said exhibiting or project¬
ing machine shall be used in exhibiting or projecting motion
pictures only in places to which no admission fee is charged.
The Licensee further covenants and agrees that the Licensee
will attach in a conspicuous place to each and every such
exhibiting or projecting machine of the Licensee’s manufac¬
ture, sold by the Licensee, except for export, after the date
hereof, a plate showing plainly not only the dates of the Let¬
ters Patent under which the said machine is licensed, but
also the following words and figures :

Patented No.

The sale and purchase of this machine gives only the right
to use it so long as this plate is not removed or defaced and in
places to which no admission fee is charged.

(7) The Licensee further covenants and agrees that to
each and every motion-picture exhibiting or projecting
machine of any kind, embodying one or more of the inven¬
tions described and claimed in the said United States Letters

94 ORIGINAL PETITION, EXHIBIT 5.

OIIIGINAL PETITION, EXHIBIT 5. 95

Patent Nos. 57S1S5, 580749, 5SG953, 58S91G, 073329,

073992, 707934, 7223S2, 744251, 770937, 771280, 785205,
and 785237, and made in tlie United States, its Territories
and possessions by the Licensee, when sold bona fide for
export, there shall be attached a plate showing plainly not
only the dates of the letters patent under which the said
machine is licensed, but also the following words and
figures :

Patented No.

Not licensed for use in the United States, its Territories
and possessions (except its insular possessions and Alaska).

It is understood by and between the parties hereto that
by “export sales” is meant all sales for delivery outside of
the “lease territory aforesaid,” when the machine, ad¬
dressed to the purchaser, agent, or consignee, is delivered
to the vessel or to a transportation company for transporta¬
tion outside of the said “lease territory aforesaid,” and not
otherwise.

(8) The Licensee further covenants and agrees that the
Licensee will not, during the continuance of this agreement,
make or sell repair parts for motion-picture exhibiting or
projecting machines which have been manufactured or
imported and sold by any other person, firm, or corporation,
who or which is licensed by the Licensor to manufacture or
import and sell motion-picture exhibiting or projecting
machines under any or all of the said United States Letters
Patent Nos. 578185, 580749, 580953, 58891G, 073329, 073992,
707934, 722382, 744251, 770937, 771280, 785205, and 785237,
when such repair parts constitute any part of any invention
described and claimed in the said United States letters
patent.

(9) The Licensee further covenants and ngrees that the
Licensee will not sell any exhibiting or projecting mncliine
which the Licensee is hereby licensed to manufacture at less
than the Licensee’s list price for such machine, except to
jobbers, and to other persons, firms, and corporations for the
purpose of resale, and that the Licensee will require such
jobbers and other persons, firms, and corporations to sell

such machines at not less than the Licensee’s list price for
such machine. Nothing in this paragraph shall prohibit,
however, the allowance of two per cent (2%) discount from
list price for ten days cash payments.

(10) The Licensee further covenants and agrees that the
Licensee will not sell, after May 1, 1909, during the continu¬
ance of this agreement, any exhibiting or projecting machine
which the Licensee is hereby licensed to manufacture, capable-
of exhibiting or projecting by transmitted light, motion
pictures on film of a width greater than approximately pne
inch (1"), at a less list price than one hundred and fifty
dollars (§150), which list price may include the machine
head, stercopticon attachment, film maga7.ine, lamp liopse,
arc lamp, rheostat, switch and switch box, and attaching
cords, except, however, that for the last five named items
may be substituted a gas burner and gas making outfit.
It is further understood and agreed that such complete
machines may be sold between February 1, 1909, and May 1,
1909, at a less list price than one hundred and fifty dollars
(§150), but only to persons, firms, or corporations not en¬
gaged in the business of renting motion picture films, and
not for use in any permanent or fixed place of exhibition.

(11) It is further mutually covenanted and agreed by and
between the Licensor and Licensee that the Licensor mpy
grant other licenses to manufacture or import and sell
motion picture exhibiting or projecting machines under any
or all of the said United States Letters Patent Nos. 578185,
580749, 580953, 588910, 073329, 073992, 707954, 722382,
744251, 770937, 771280, 785205, and 785237, said licenses
to be in writing, and not to be granted or continued under
terms, conditions, or stipulations which are in any respect
more favorable to the Licensees named therein than those
set forth in this agreement (except to the American Muto-
scope & Biograpli Company of New- York City, which is
pay no royalties on any exhibiting or projecting machines
embodying any or all of the inventions described and claimed
in the aforesaid Letters Patent Nos. 578185, 580749, -580953,
58891G, 073992, 707934, ■ and 722382, and to .the -Edison

65498-12 - 13

PETITION, EXHIBIT 5.

96 ORIGINAL PETITION, EXHIBIT 5.

ORIGINAL I

.Manufacturing Company, of Orange, New Jersey, and the
firm of Marvin and Casler, of Canastota, New York, neither
of which is to pay any royalties on any exhibiting or pro¬
jecting machines embodying any or all of the inventions
described and claimed in the aforesaid letters Patent Nos.
67SXS5, 580749, 5SG953, 588910, 073992, 707934, ai.d

-722382, when such exhibiting or projecting machines are sold
bona fide for export, the covenants and conditions in the
licenses to each and all of the said firms or corporations to
be otherwise like those set forth in this agreement).

(12) It is mutually covenanted and agreed by and be¬
tween the Licensor and Licensee that, unless sooner ter¬
minated, as hereinbefore and hereinafter provided, this
agreement, and the license granted thereby, shall take effect
on February 1, 1909, and shall continue until June 20, 1910,
but that the Licensee may renew this agreement and license
thereafter from year to year upon the same terms, conditions,
and stipulations as herein provided, by giving notice to the
Licensor on or before the 20tli day of March in each year be¬
ginning with the year 1910, of the Licensee’s election to so
renew this agreement and license, and upon the giving of
each such notice this agreement and the license thereby
granted shall be considered and treated by the Licensor and
Licensee as renewed for the period of one year, beginning
June 20th of the year following such notice, and such notice
and renewal may be given and made by the Licensee during
the life or lives of each or all of the patents under which the
Licensee is hereby licensed.

In case, however, that the Licensor should become bank¬
rupt, cease doing business, or should be dissolved, voluntarily
or otherwise, or its charter should be repealed, then, on the
happening of e tlier of such events, this agreement and the
with the additional Licensee hereinbefore
piovi^ed for, that are then in force, shall forthwith ter¬
minate and be at an end.

kJmL" covenanted and agreed by

and between the Licensor and Licensee, that if, during said
original term or during any such renewal period, either

party should, knowingly or through gross neglect or care¬
lessness, be guilty of a breach, violation, or nonperformance
of its covenants, conditions, and stipulations resulting in
substantial injury to the other party, and should, for the
period of forty (40) days after notice thereof from the other
party persist therein or fail to correct, repair, or remedy the
same, then and in such case the party aggrieved may ter¬
minate this agreement by giving notice in writing to the
gnilty party of its intention so to do. It is, however,
mutually covenanted and ngreed by and between the Licensor
and Licensee that if the guilty party should correct, repair,
or remedy such breach, violation, or nonperformance of its
covenants, conditions, and stipulations within the said
period of forty (40) days after such notice, and should there¬
after knowingly or through gross neglect or carelessness be
guilty of a second breach, violation, or nonperformance of
its covenants, conditions, and stipulations, resulting in
substantial injury to the other party, then and in such case,
the party aggrieved may terminate this agreement by giving
thirty (30) days’ notice in writing to the guilty party of its
intention so to do. Such termination of the agreement,
however, shall not prejudice either party hereto in the
recovery of damage because of any such breach, violation, or
nonperformance by the other party hereto.

(14) All notices provided for in this agreement, shall be
in writing and shall be given by delivering the same to the
Licensor or Licensee, as the case may be, or by depositing
such notices, postage prepaid, in any post office of the
United States, in a sealed envelope directed to the Licensor
or Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

(15) It is mutually covenanted and ngreed by and between
the Licensor and Licensee that after notice of the termination
of this agreement and the license granted thereby by either
party, as provided for in paragraph 13 of this agreement,

. and after the same have been terminated, no matter what the
cause or manner of termination may be, neither this license
agreement, nor the fact that the Licensee lias entered into

98 ORIGINAL PETITION, EXHIBIT 5.

or acted under it, shall he used in any manner, directly or
indirectly, by or for the Licensor, its successors, assigns or
legal representatives or hy or for others with its or their
consent or permission, against the Licensee, or the Licensee’s
successors or legal representatives, in any litigation, con¬
troversy or proceeding involving the Licensee, or them or
any other persons, firms or corporations, or in any other way,
it being understood and agreed that upon such termination
the positions and rights of the Licensor and Licensee shall be
the same as if this agreement had not been made; provided,
however, that the rights of neither party shall be prejudiced
by such termination in the recovery of damages for any
breach or other violation of this agreement by the other
occurring prior to such termination.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform those acts, the day and year first above written.

Motion Picture Patents Company,
By Frank L. Dyer, President.

Armat Moving Picture Company,
By Thos. Armat, President.

Attest:

George F. Scull, Secretary.

Attest:

Louis H. Stabler, Secretary.

1
; /S

V'V

Charter of General Film Company, April 18,
1910.

State op Maine;

Certificate of organization of a corporation under the general
law.

The undersigned, officers of a corporation organized at
Portland, Maine, at a meeting of the signers of the articles
of agreement therefor, duly called and held at No. 9E>
Exchange Street, in the city of Portland, State of Maine, on
Monday, the eighteenth day of April, A. D. 1910, hereby
certify as follows:

The name of said corporation is General Film Company.

The purposes of said corporation are—

For the purpose of buying, selling, or otherwise acquiring
or disposing of letters patent and licenses under letters patent
for inventions pertaining to the production and use of pho¬
tographic or other negatives and photographic or other posi¬
tives, of objects at rest and objects in motion; manufacturing,
buying, using, selling, or otherwise acquiring or disposing of, or
leasing, apparatus, materials, processes, and rights, pertaining
to the production and use of photographic or other negatives
and photographic or other positives, of objects at rest and
objects in motion; manufacturing, buying, using, selling, or
otherwise acquiring or disposing of, or leasing, photographic or
other negatives and photographic or other positives of objects
at rest and objects in motion; manufacturing, buying, using,
selling, or otherwise acquiring or disposing of, or leasing,
apparatus and materials of every character used in exhibi¬
tions, entertainments, motion-picture shows and theatrical
performances, and in equipping theaters, halls,’ and similar
99

100

ORIGINAL PETITION) EXHIBIT 6.

ORIGINAL PETITION,

EXHIBIT 0.

101

places of amusement, entertainment, and instructions; pur¬
chasing and holding such real and personal property necessary
for or incidental to the purposes of this company, or any of
them; mortgaging, leasing, selling, or disposing of by agree¬
ment or otherwise, and conveying, any and all of the real or
personal property of the corporation; buying or otherwise
acquiring and holding, selling, or otherwise disposing of,
the stocks, bonds, notes, and other evidences of indebtedness
of any domestic or foreign corporation, and issuing and
delivering its stock, bonds, or other obligations in payment
or exchange for stock, bonds, and other obligations of other
corporations organized for purposes similar to the purposes
of this corporation or conducting a business similar to that
herein provided for or capable of being conveniently carried
on in connection with the business above described; conduct¬
ing its business in all its branches, and having one or more
offices; holding, leasing, or conveying real or personal prop¬
erty in all States and in all foreign countries to which the
business of the company may be extended, and borrowing
money and doing any acts to protect and improve the business
of the corporation and enhance the value of its property.

To issue any and all bonds necessary to the business of
the corporation, and to secure the same by mortgage, deed
of trust, or any other form of conveyance; to issue as pre¬
ferred stock such part of its capital stock as shall be flxed
aiid’ determined in the by-laws; to acquire and undertake
the whole or any part of the business, property, assets, and
liabilities of any person, firm, or corporation engaged in
a business similar to that herein provided for, or capable
of being conveniently carried on in connection with the
business above described; to do all or any part of the above
things as principals, agents, contractors, or otherwise, and
by or through agents, or otherwise, and either alone or in
conjunction with others; and to do any and all things inci¬
dental to the prosecution of the purposes herein contained,
or any of them, and not inconsistent with the laws of the
State of Maine.

The amount of capital stock is two million ($2,000,000)
dollars.

The amount of preferred stock is one million live hundred
thousand ($1,500,000) dollars.

The amount of common stock is five hundred thousand
($500,000) dollars.

The amount of capital stock already paid in is eleven
thousand four hundred ($11,400) dollars.

The par value of the shares is one hundred ($100) dollars

The names and residences of the owners of said shares
arc as follows :

George Kleine . : .

George K. Spoor .

Blograph Company..

leaving in the treasury, unsubscribed for 10,880 shares, of
which 14,991 are preferred and 4,895 are common.

Said corporation is located at Portland, in the county of
Cumberland.

The number of directors is ten and their names are Prank L.
Dyer, J. A. Berst, Gaston Melies, William M. Selig, Sicgmund
Lubin, Samuel Long, J. J. Kennedy, William T. Bock,
George Kleine, and .George K. Spoor. .

The name of. the clerk is. L. L. Highland his residence is
Portland, Maine,

102

ORIGINAL PETITION, EXHIBIT 6.

Tlie undersigned, J. J. Kennedy, is president; the under¬
signed J. A. Berst, is treasurer, and the undersigned, J. J.
Kennedy, J. A. Berst, George Kleine, Samuel Long, Sieg-
mund Lubin, W. M. Selig, Gaston Mclics, and William T.
Bock are a majority of the directors of said corporation.
Witness our hands this eighteenth day of April, A. D. 1910.

J. J. Kennedy,

President.

J. A. Berst,

Treasurer.
J. J. Kennedy,

J. A. Berst,

George Kleine,
Samuel Long,
Siegmund Lubin,

W. M. Selig,

Gaston Mblies,

Wm. T. Kook,

. Directors.

Portland, Maine, April 15, 1910.

Then personally appeared J. J. Kennedy, J. A. Berst,
George Kleine, Samuel Long, Siegmund Lubin, Wm. M.
Selig, Gaston Melies, and William T. Bock, and severally
made oath to the foregoing certificate, that the same is true.

Before me,

Harry P. Sweetser,
Justice of the Peace.

State op Maine,

Attorney General’s Oppioe,

April SO, 1910.

I hereby certify that I have examined the foregoing certifi¬
cate, and the same is properly drawn and signed, and is con¬
formable to the constitution and laws of the State.

Charles P. Barnes,
Asst. Attorney General.

•fU

iSf

original petition, exhibit 6. 103

(Endorsed:) Copy. (Name of corporation) General Film
Company. Cumberland, SS. Begistry of Deeds. Kcceived
April 21, 1910, at 10 h. 5 m. a, m. Becordcd in vol. 42,
page 69. Attest: Frank L. Clark, Begister. A true copy
of record. Attest: Frank L. Clark, Begister. State of Maine.
Office of Secretary of State. Augusta, April 21, 1910.
Beceived and filed this day. Attest: A. I. Brown, Secretary
of State. Bccorded in vol. 73, page 309.

65498-12 - 14

Agreement Between Motion Picture Patents

Company and General Film Company,

April 21, 1910.

1 This agreement, made this 21st day of April, 1910, by
and between the Motion Picture Patents Company, a cor-
' poration organized and existing under the laws of the State
of New Jersey, and having an office in the city, county, and
State of New York, party of the first part (hereinafter
referred to as the Licensor), and the General Film Company,
a corporation organized and existing under the laws of the
State of Maine, and having an office in said city of New
York, party of the second part (hereinafter referred to as
the Licensee), witnesseth that: _

2. Whereas the Licensor represents that it is organized
to own, deal in, and grant licenses under letters patent per¬
taining to the motion-picture art, and that it is the owner of
all the right, title, and interest in and to the following United
States Letters Patent relating to that art—

No. 578185, dated March 2, 1897, for vitascope, granted to
Thomas Armat.

No. 580749, dated April 13, 1897, for vitascope, granted to
Thomas Armat.

No. 580953, dated July 20, 1897, for plmntoscope, granted
to Charles F. Jenkins and Thomas Armat.

No. 588916, dated August 24, 1897, for kinetoscope,
granted to Charles M. Campbell, as the assignee of Willard
G. Steward and Ellis F. Frost.

No. 6290G3, dated July 18, 1899, for kinetoscopic camera,
granted to American Mutoscope Company as the assignee of
Herman Casler.

No. 673329, dated April 30, 1901, for kinetoscope, granted
to The American Yitagraph Company ns the assignee of
Albert E. Smith.

ORIGINAL PETITION, EXHIBIT 7. 105

No. 673992, dated May 14, 1901, for vitascope, granted to
Thomas Armat.

No. 707934, dated August 26, 1902, for projecting kineto¬
scope, granted E. & H. T. Anthony & Co., as assignees of
Woodville Latham.

No. 722382, dated March 10, 1903, for animated-picture
apparatus, granted to American Mutoscope and Biograph
Company as the assignee of John A. Pross;

No. 744251, dated November 17, 1903, for kinetoscope,
granted Albert E. Smith;

No. 770937, dated September 27, 1904, for kinetoscope,
granted the Vitngraph Company of America as the assignee
of Albert E. Smith ;

No. 771280, dated October 4, 1004, for winding reel,
granted Albert E. Smith ;

No. 785205, dated March 21, 1905, for fiame-sliield for
kinetoscopcs, granted the Vitagrapli Company of America
ns the assignee of William Ellwood ; and

No. 785237, dated March 21, 1905, for film-holder for
kinctoscopes, granted the Yitagraph Company of America
as the assignee of Albert E. Smith; and

3. Whereas, the Licensor is the owner of all the right,
title, and interest in and to reissued letters patent of the
United States numbered 12,192, dated January 12th, 1904,
the original letters patent whereof are numbered 5891G8 and
dated August 31, 1897, under which reissued letters patent
licenses have been granted to the Edison Manufacturing
Company of Orange, New Jersey; Pathe Freres, of New
York, New York; the Kolem Company (Inc.), of New
York, New York; the Essanay Film Manufacturing Com¬
pany of Chicago, Illinois; the Lubin Manufacturing Com¬
pany of Philadelphia, Pennsylvania; Gaston Melics, of New
York, New York, (for himself and as attorney in fact for
George Melics of Paris, France) ; the Selig Polyscope Com¬
pany of said Chicago; the Vitagrapli Company of America,
of New York, New York; George Kleine of said Chicago, and
the Biograpli Company, of New York, New York (which
licensees are, with their successors as -.such, hereinafter
referred to ns “Patents Company Licensees”) ; and

10G ORIGINAL PETITION, EXHIBIT 7.

4. Whereas, the Licensee desires to obtain from the
Licensor a license under said reissued Letters Patent 12192,
and to lease positive motion pictures in certain territory, for
use in exhibiting or projecting machines containing the
inventions, or any of them, described and claimed in said
Letters Patent Nos. 578185, 580749, 5SG953, 58891G, 073329,
G73992, 707934, 722382, 744251, 770937, 771280, 785205, and
785237, and to sell positive motion pictures in certain other
territory;

5. Now, therefore, the parties hereto, for and in consid¬
eration of the sum of one dollar to each paid by the other,
and for other good and valuable considerations from each to
the other moving, receipt of all of which is hereby acknowl¬
edged, have agreed as follows :

G. The Licensor hereby grants to the Licensee, for the
term and subject to the covenants, conditions, and stipula¬
tions hereinafter expressed, the right and license for the
United States, its territories, dependencies, and possessions
(hereinafter called the “territory aforesaid”) to have posi¬
tive motion pictures manufactured for it by “Patents Com¬
pany Licensees,” and which motion pictures it shall own,
on film of a greater width than approximately one inch,
embodying the inventions of said reissued Letters Patent
No. 12192, from negative motion pictures made in foreign
countries and which are procured by it from others than
“Patents Company Licensees,” and to purchase positive
motion pictures manufactured in foreign countries, and to
lease said positive motion pictures, so manufactured for and
purchased by it, in the United States, its territories, depend¬
encies, and possessions (with the exceptions of its insular
possessions and Alaska), hereinafter referred to ns the
“lease territory aforesaid,” to motion picture exhibitors
upon condition that they be used solely in exhibiting or pro¬
jecting machines containing the inventions or some of them
of said Letters Patent Nos. 578185, 580749, 58G953, 58891G
073329, 073992, 707934. 722382, 744251, 770937, 771280.
785205, and 785237, and licensed by the Licensor and to
sell said positive motion pictures so manufactured for and

ORIGINAL PETITION, EXHIBIT 7. ][)7

purchased by it, in or for said insular possessions and Alaska
and foreign countries, hereinafter referred to as “said export
territory” or “for export”; it being understood and agreed
by the Licensor and Licensee that the latter in the leasing
of a positive motion picture shall not be limited to a single
lease thereof to one motion picture exhibitor, but that it
may, subject to the provisions of section 5 of paragraph
hereof numbered 14, lease the same as often and to as many
different motion picture exhibitors as it may desire.

The License hereby granted is personal to the Licensee
and, in the event of the permanent discontinuance or retire¬
ment from business of the Licensee for a period of six con¬
secutive months, the license hereby granted shall be imme¬
diately terminated.

7. The Licensee hereby recognizes and admits the validity

of said reissued Letters Patent No. 12192 and Letters Patent
Nos. 578185, 580749, 58G953, 58891G, G73329, G73992

707934, 7223S2, 744251, 770937, 771280, 785205, and 785237
and agrees not to contest or question the same during the
continuance of this agreement.

8. The Licensee covenants and agrees that all positive
motion pictures manufactured for it, in the “territory
aforesaid,” during the continuance of this agreement, will
be so manufactured for it only by “Patents Company
Licensees”; that in the manufacture of such positive motion
pictures in the “territory aforesaid,” it will have used only
negative motion pictures made in foreign countries and
procured by it from others than “Patents Company Licen-
secs”; and that it will not, in the “territory aforesaid,” pur¬
chase or otherwise acquire or lease or sell or otherwise dispose
of or deal in positive motion pictures except those manufac¬
tured for and purchased by it as aforesaid, without the con-
sent in writing of the Licensor, nor sell or otherwise dispose
of any negative motion pictures.

9. The Licensee covenants and agrees that it will, after
the license hereby granted takes effect, pay royalty to the
Licensor between the first and fifteenth days of each month
on all negative morion pictures procured and positive

10S ORIGINAL PETITION, EXHIBIT 7.

motion pictures purchased by it as aforesaid during the
preceding month, at the maximum rate of onelinlf (Vs) cent
per running foot hereinafter provided for; that it will keep
accurate hooks of account and submit statements at the
time of making such payments (sworn to, if required by the
Licensor) giving the total number of running feet of such
motion pictures, classified according to subjects, which the
Licensee has so procured and purchased during the preceding
month; that the Licensor shall have the right to inspect, its
books of account, through any reputable chartered ac¬
countants, to determine the amount of such motion pictures
- which it shall have so procured and purchased after the license
hereby granted takes effect; and that any failure to pay
the said royalties when due and payable, or any making of
a false return by the Licensee of the amount of such motion
pictures so procured and purchased by it, shall make the
license hereby granted terminable by the Licensor.

10. The Licensor further covenants and agrees that the
royalties which it will charge to the Licensee for negative
motion pictures procured and positive motion pictures pur¬
chased by the Licensee ns aforesaid shall not, during the
year preceding June 20, 1910, and during any year thereafter
during the continuance of this agreement, as hereinafter pro¬
vided, exceed the following rates— that is to say :

If the amount of such motion pictures for any such year
be four million running feet or loss, a royalty of one-half (y2l
cent per running foot on the total number of running feet
for that year; if the amount thereof for any such year ex¬
ceed four million running feet but do not exceed six million
running feet, a royalty of four and one-half (4i/») mills per
running foot on the total number of running feet for that
year; if the amount thereof for any such year exceed six
million running feet but do not exceed eight million running
feet, a royalty of four (4) mills per running foot on the total
number of running feet for that year; if the amount thereof
for any such year exceed eight million running feet but do
not exceed ten million running feet, a royalty of three and
three-quarters (3%) mills per running foot on the total num-

ORIGINAL PETITION, EXHIBIT 7. 109

ber of running feet for that year; and if the amount thereof
for any such year exceed ten million running feet, a royalty
of three and one-quarter (3%) mills per running foot on the
total number of running feet for that year.

The Licensor further covenants and agrees that it will,
within thirty (30) days after June 20 of each year, repay
to the Licensee any excess of royalties which may have been
paid by the Licensee during the year by reason of the differ¬
ence between the rate of one-lialf (fA) cent per running foot
which the Licensee shall have paid and the rate, based on the
total amount of such motion pictures procured and purchased
by it for the year, which the Licensee should have paid ac¬
cording to the foregoing schedule, the royalty rate to be
charged for the period between the date hereof and June 20,
1910, to be that which would have been charged if the pro¬
curing and purchasing of such motion pictures by the
Licensee had been continued for a year at the same rate at
which they were so procured and purchased for such period.

The Licensor and Licensee further mutually covenant and
agree that no royalty other than or in addition to that pro¬
vided for in this paragraph shall be charged to or collected
from the Licensee by the Licensor up to June 20, 1911; or
during any renewal of this agreement up to August 31, 1914,
the date of the expiration of said reissued Letters Patent
No. 12192, and no royalty whatever shall be charged to or
collected from the Licensee by the Licensor after either of
the claims of said reissued Letters Patent No. 12192 and
either of the claims of reissued Letters Patent No. 12037,
dated September 30, 1902 (owned by the Licensor' and under
which all of the Patents Company Licensees, with the excep¬
tion of George Kleinc, have been licensed), in any suit for
infringement thereof, is hold invalid by a court that last
hears and decides such suit, or after August 31, 1914, during
any renewal of this agreement.

11. The Licensee further covenants and agrees not to sell
or otherwise dispose of or offer for sale, sin the “territory
aforesaid,” unexposed positive or negative motion picture
films during the continuance of this agreement; hut this

110

ORIGINAL PETITION, EXHIBIT 7.

Ill

provision shall not prevent the Licensee from selling, as
refuse, in the "territory aforesaid,” second-hand positive or
negative motion pictures which have been used or become
shopworn or in any way damaged, to a manufacturer or
manufacturers licensed by the Licensor to manufacture
sensitized motion picture Him for “Patents Company
Licensees,” or to a manufacturer to manufacture other
articles than Him therefrom, hut only after they have been
rendered by the Licensee unsuitable for use as motion
pictures by cutting or otherwise defacing them; nor from
selling exposed positive or negative film (either waste or in
rolls) known as “blank film” for use by exhibitors for
leaders or for spacing or for similar purposes, but which
shall not and can not be otherwise employed for the exhibi-
tion of motion pictures.

12. The Licensee further covenants and agrees not to lease,
loan, rent out, sell, or offer for sale, or otherwise dispose of in
the “territory aforesaid,” motion pictures to anyone purchas¬
ing or otherwise obtaining, leasing, using, loaning, renting
out, selling, offering for sale, or otherwise disposing of or
dealing in motion pictures containing the invention of said
reissued Letters Patent No. 12192, not the output of the
Licensee or of other licensees of the Licensor under said
Letters Patent.

13. It is further mutually covenanted nnd agreed by tin
Licensor and Licensee that the Licensee shall have the rigid
to sell motion pictures, manufactured for or purchased by ii
as aforesaid, in or for “said export territory,” when the goods,
addressed to the purchaser, agent, or consignee, are delivered
to the vessel or to a transportation company for transporta¬
tion to said export territory*” and not otherwise; but in no
case shall sales “for export” of motion pictnres be knowingly
made by the Licensee to persons, firms, or corporations whom
such Licensee has reason to believe will reimport them into
the “lease territory aforesaid” for sale or use.

14. It is further mutually covenanted and agreed by and
between the Licensor nnd Licensee that no lease of positive
motion pictures manufactured for or purchased bv the

Licensee, as aforesaid, shall be made in the “lease territory
aforesaid” by the Licensee, except upon and subject to the
following terms and conditions, namely: (1) That the lessee
of such positive motion picture shall not sell or otherwise
dispose of the same, but shall only have the right to use such
positive motion picture in giving motion-picture exhibitions
in machines licensed by the Licensor under the said Letters
Patent Nos. 578185, 5S0749, 58G953, 58891G, G73329, G73992,
707934, 722382, 744251, 770937, 771280, 785205, and 785237,
or one or more of them, or under any other letters patent that it
may hereafter acquire or control; and (2) that the lessee shall
not make or permit others to make any reproduction com¬
monly known as a “dupe” of such positive motion picture or
any other positive motion picture containing the invention
of said reissued Letters Patent No. 12192; and (3) that the
lessee shall not sublet such motion picture; and (4) that the
lesseo of such positive motion picture shall not remove the
trade-mark or trade name or title therefrom; and (5) that
the Licensee shall on the first day of every month, beginning
with December 1, 1910, withdraw from the market an amount
of such positive motion pictures (not leased by the Licensee
over twelve months before) equal to the amount of such
positive motion pictures that was so leased by it during the
seventh month preceding the date of each such withdrawal,
with the exception, however, that where any such positive
motion pictures are destroyed by fire or lost in transporta¬
tion the amount so destroyed or lost shall be deducted from
the amount to be withdrawn as aforesaid; and (6) that the
violation of any of the foregoing conditions entitles the lessor
to immediate possession of such motion picture without
liability for any price which the lessee or the person in whose
possession it is found may have paid therefor.

15. The Licensee covenants nnd agrees that in the “lease
territory aforcaid” the Licensee will dispose of the positive
motion pictnres manufactured for and purchased by it, as
aforesaid, only by the sale “for export” and shipment there¬
of into “said export territory” or by the lease thereof to
motion-picture exhibitors for the purpose only of using such

112 ORIGINAL PETITION, EXHIBIT 7.

motion pictures for giving exhibitions thereof in exhibiting
or projecting machines licensed by the Licensor containing
the inventions, or some of them, described and claimed in
said Letters Patent Nos. 578185, 580749, 58G953, 58891G,
073329, 673992, 707934, 722382, 744251, 770937, 771280,
785205, and 785237, or in Letters Patent hereafter acquired
or controlled by the Licensor; and will not nse the same for
the purpose of giving exhibitions thereof for profit, directly
or indirectly; it being expressly understood and agreed by
and between the Licensor and Licensee, however, that the
Licensee shall he at liberty to give exhibitions of such posi¬
tive motion pictures without profit, directly or indirectly,
and to possible or prospective lessees or purchasers thereof;
and the Licensee further covenants anti agrees not to know¬
ingly allow positive motion pictures manufactured for or
purchased by it under this agreement to be used with any
exhibiting or projecting machine not licensed by the Licensor
under the Letters Patent mentioned in this paragraph, and
that it may hereafter acquire or control; or one or more of
them, except by and with the consent of the Licensor;
and also to refrain from supplying such motion pictures
manufactured for or purchased by it under this agreement,
for use with any exhibiting or projecting machine, the
license for which, under the aforesaid Letters Patent, or one
or more of them, has been terminated, and the Licensee has
been notified thereof by the Licensor; and also to refrain
from supplying such motion pictures manufactured for and
purchased by it under this agreement to any lessee who
may loan or sublease such motion pictures and the Licensee
has been notified thereof by the Licensor, or who may nse
such motion pictures for giving exhibitions thereof in ex¬
hibiting or projecting machines not licensed by the Licensor
as aforesaid, or the license for which lias been terminated
and the Licensee has been notified thereof by the Licensor;
and the Licensor covenants and agrees to promptly notify
the Licensee and all other persons, firms, and corporations
licensed under said reissued Letters Patent No. 12192 of
the termination of any license for the nse of any exhibiting

ORIGINAL PETITION, EXHIBIT 7. 113

or projecting machines under the aforesaid Letters Patent,
or any of them.

16. The Licensor and Licensee further mutually covenant
and agree that if in any suit brought upon said reissued
Letters Patent No. 12192 either of the claims of said reis¬
sued Letters Patent No. 12192 is held invalid by a court
that last hears and decides such suit, or should be held by
such court not to be infringed, then, and in any such case, the
Licensee may at once terminate this agreement and the
license thereby granted, by giving notice of its election so
to do to the Licensor.

17. The Licensor and Licensee further mutually covenant
and agree that by the expression “motion pictures” as used
in the foregoing agreement is meant transparent or translu¬
cent tapelike film having photographs thereon of objects in
motion.

18. It is further mutually covenanted and agreed by
and between the Licensor and Licensee that, unless sooner
terminated, as hereinbefore or hereinafter provided, this
agreement and the license granted thereby shall take effect'
at the date hereof, and shall continue until June 20, 1911,
but that the Licensee may renew this agreement and license
thereafter from year to yenr upon the same terms, conditions,
and stipulations as herein provided by giving notice to
the Licensor on or before April 20 of each year, beginning
with the year 1911, of the Licensee’s election to so renew
this agreement and license, and upon the giving of each
such notice this agreement and the license thereby granted
shall be considered and treated by the Licensor and Licensee
as renewed for a period of one year, beginning June 20th of
the year following such notice, except that the last renewal
period shall be for the period from June 20, 1914, to August-
26, 1919,^ the’ date of expiration of the Letters Patent
No: 707934.

It is further mutually covenanted and agreed by and
between the Licensor and Licensee that , if, during said
original term or during any such renewal -period, i either
party should .-knowingly or through gross neglect or care-

114

ORIGINAL PETITION, EXHIBIT 7.

lessness be guilty of a breach, violation, or nonperformance
of its covenants, conditions, and stipulations, resulting in
substantial injury to the other party, and should for the
period of forty (40) days after notice thereof from the other
party persist therein or fail to correct, repniv, or remedy
the same, then and in such case the party aggrieved may
terminate this agreement by giving notice in writing to the
guilty party of its intention so to do. It is, however,
mutually covenanted and agreed by and between the
Licensor and Licensee that if the guilty party should cor¬
rect, repair, or remedy such breach, violation, or non¬
performance of its covenants, conditions, and stipulations
within the said period of forty (40) days after such notice,
and Bhould thereafter knowingly or through gross neglect or
carelessness be guilty of a second breach, violation, or non¬
performance of its covenants, conditions, and stipulations,
resulting in substantial injury to the other party, then and
in such case the party aggrieved may terminate this agree¬
ment by giving thirty (30) days’ notice in wilting to the
guilty party of its intention so to do. Such termination of
the agreement, however, shall not prejudice either party
hereto in the recovery of damages because of any such
breach, violation, or nonperformance by the other party
hereto.

19. All notices provided for in this agreement shall be in
writing and shall be given by delivering the same to the
Licensor or Licensee, as the case may be, or to an officer of
the Licensor or Licensee, as the case may be, or by depositing
such notice, postage prepaid, in any post office of the United
States, in a sealed envelope directed to the Licensor or the
Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

20. It is mutually covenanted and agreed by and between
the Licensor and Licensee that after notice of the termination
of this agreement and the license granted thereby by either
party, as provided for in paragraphs 16 and 18 of this agree¬
ment, and after the same have been terminated, no matter
what the cause or manner of termination may be, neither

ORIGINAL PETITION, EXHIBIT 7. 115

this license agreement, nor the fact that the Licensee has
entered into or acted under it, Bhall be used in any manner,
directly or indirectly, by or for the Licensor, its successors,
assigns or legal representatives, or by or for others with its
or their consent or permission, against Licensee, or the
Licensee’s successors or legal representatives, in any litiga¬
tion, controversy or proceeding involving the Licensee or
them or any other persons, firms or corporations, or in any
other way, it being understood and agreed that upon such
termination the positions and rights of the Licensor and
Licensee shall be the same as if this agreement had not
been made; provided, however, that the rights of neither
party shall be prejudiced by such termination in the recovery
of damages for any breach or other violation of this agree¬
ment by the other occurring prior to such termination.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above written.

Motion Picture Patents Company,
By Prank L. Dyer, President.

General Film Company,
By J. J. Kennedy, President.

Attest:

George P. Soull,

Secretary.

Exhibit 8.

Agreement Between General Film Company
and Edison Manufacturing1 Company,
April 21, 1910.

1. Articles of agreement, made and entered into tliis -

day of - , 1010, by and between the Edison Manufac¬

turing Company, a corporation organized and existing under
tbe laws of the State of New Jersey, and having an office in
the city of Orange in Baid State, party of the first part, and
the General Film Company, a corporation organized and
existing under the laws of the State of Maine, and having an
office in the city, county, and State of New York, parly of
the second part; witnessetli that:

2. Whereas the party of the first part has been licensed by
the Motion Picture Patents Company; of New York City, to
manufacture motion pictures by the use of cameras under
reissued Letters Patent No. 12037, dated September 30, 1902,
Letters Patent No. 029063, dated July 18, 1899, and Letters
Patent No. 707934, dated August 20, 1902, and containing
the inventions of reissued Letters Patent No. 12192, dated

January 12, 1904, - , and to lease positive motion

pictures so manufactured - by it (hereinafter referred

to as “Licensed Motion Pictures”) for use on projecting
machines licensed by said Motion Picture Patents Company
(hereinafter referred to as “Licensed Projecting Machines”)
under Letters Patent Nos. 578185, 580749, 580953, 588910,
037329, 073992, 707934, 722382, 744251, 770937, 771280,
785205, and 785237, owned by said Motion Picture Patents
Company, covering motion picture projecting machines; and

3. Whereas, the party of the second part has been licensed
by said Motion Picture Patents Company to lease such
“Licensed Motion Pictures,” but only on film of a greater
width than approximately one (1) inch, from persons, firms
and corporations licensed by said Motion Picture Patents
Company to manufacture or manufacture and import such

ORIGINAL PETITION, EXHIBIT 8.

"Licensed Motion Pictures,” and to sublet the said “Licensed
Motion Pictures ” in certain territory (which, however, may
hereafter be extended), to motion picture exhibitors for use
on “Licensed Projecting Machines”; and has also been
licensed by said Motion Picture Patents Company to have
positive motion pictures (hereinafter included in' 'the term
“Licensed Motion Pictures”) manufactured for it by certain
of said licensees, including the party of the first part (and
hereinafter referred to as the “Patents Company Licensees
aforesaid”) on film of the width aforesaid, embodying the
inventions of said reissued Letters Patent No. 12192 from
negative motion pictures made in foreign countries and
which are procured by it from others than the “Patents
Company Licensees aforesaid,” and which positive motion
pictures it shall own, and also to purchase positive motion
pictures (hereinafter included in the term “Licensed Motion
Pictures”) manufactured in foreign countries, and to lease
all said positive motion pictures to motion picture exhibit¬
ors for use by such exhibitors on “Licensed Projecting
Machines”; and

4. Whereas, the party of the second part is desirous of
leasing “Licensed Motion Pictures,” on film of the width
aforesaid, from the party of tbe first part for the purpose of
subleasing the same to motion picture exhibitors, under its
license aforesaid from the Motion Picture Patents Company;

5. Now, therefore, the parties hereto of the first and sec¬
ond parts do hereby covenant and agree as follows:

0. The party of the first part covenants and agrees that
it will, during the continuance of this agreement, supply
the party of the second part with ns mnny copies of each
“Licensed Motion Picture,” released by the party of the
first part, on film of the width aforesaid, as the party of
the second part requires for the conduct of its business,
and will so supply them at the same leasing prices and
otherwise upon the snme terms and conditions ns it, at
corresponding times, lenses such “Licensed Motion Pictures”
to other persons, firms, or corporations, and that it will not,
dnring the continuance of this agreement, discriminate
against the party of the second part, in favor of other per-

118 ORIGINAL PETITION, EXHIBIT 8.

sons, firms, or corporations to whom it leases sueli “Licensed
.Motion Pictures,” in filling orders for sueli “Licensed
Motion Pictures,” in terms of payment tlierefor or in any
other way which might give, or tend to give, such other
persons, firms, or corporations any advantage over the party
of the second part.

7. The party of the second part covenants and agrees
that it will, during the continuance of this agreement, lease
from the party of the first part “Licensed Motion Pictures,”
on film of the width aforesaid, at the prices and upon the
terms and conditions provided for in the last preceding
paragraph, and that it will, on each Monday, make or mail
payment to the party of the first part for all such “Licensed
Motion Pictures,” shipped by the party of the first part
to the party of the second part, on the order of the latter,
and for which the party of the second part has received
invoices from the party of the first part, during the preced¬
ing week; and that it will use its best efforts to intro¬
duce the same to and extend the use thereof by motion-
picture exhibitors using the “Licensed Projecting Machines,”
aforesaid; that for each sixty-two customers or the major
fraction thereof that it serves during any two consecutive
weeks during the continuance of this agreement from any
place of business operated by it for the purpose of lensing
and subleasing motion pictures among motion-picture
exhibitors, it will lease from the party of the first part, during
each such two consecutive weeks, and will distribute from
each such place of business, one reel, of a subject or subjects
released by the party of the first part not more than one
month previously, of approximately one thousand (1,000)
running feet of such “Licensed Motion Pictures,” and that
it will so lease such a reel for each such place of business
during any such two consecutive weeks, even if its cus¬
tomers, which it solves from such place of business during
such two consecutive weeks, do not aggregate sixty-two
customers or the major fraction thereof; it being expressly
covenanted and agreed, however, by and between the parties
hereto that the party of the second part shall not be required
to lease from the party of the first part move than eighty (SO)

ORIGINAL PETITION, EXHIBIT 8. 119

reels of approximately one thousand (1,000) running feet
per reel of “Licensed Motion Pictures” in any two con¬
secutive weeks; and further that it may lease “Licensed
Motion Pictures” on film of the width aforesaid from other
“Patents Company Licensees aforesaid” than the party of
the first part, and sublet such “Licensed Motion Pictures”
to motion-picture exhibitors.

8. The party of the second part further covenants and
agrees that it will, in addition to the leasing prices herein¬
before referred to, pay to the party of the first part, at the
end of each year during the continuance of this agreement,
the following share of the net profit realized by it during
that year from the subleasing and leasing, as aforesaid, of
“Licensed Motion Pictures,” to exhibitors and from the sale
of “Licensed Projecting Machines,” and from all other
sources, to wit: Such a proportion of the balance, if any, of
such net profit, remaining after deducting therefrom the
dividend of seven per cent (7 %) for that year on its issued
preferred stock and an amount equal to a twelve per cent
(12%) dividend on its issued common stock, ns the number of
running feet of “Licensed Motion Pictnres” leased by it
from the party of the first pnrt during that year hears to the
total amount of running feet of “Licensed Motion Pictures”
leased by it from all “Patents Company Licensees afore¬
said” during that year (“Licensed. Motion Pictures” manu¬
factured for or purchased by the party of the second part,
ns aforesaid, as well as “Licensed Motion Pictures” leased to
it by “Patents Company Licensees aforesaid” produced from
negatives made' on its order, to bo excluded).

9. It is mutually covenanted and agreed by and between
the parties hereto that by “net profit,” ns used in the last
preceding paragraph, is meant moneys remaining after
deducting from the gross earnings and income of the party
of the second part from “Licensed Motion Pictures” and
“Licensed Projecting Machines” and from all other sources,
all operating expenses connected with ' the business of the
party of tlie'sccond part.

10. It is mutually covenanted and agreed by add between
the parties hereto' that’ the yearly payments out of : the7 bnl-

120

121

ORIGINAL PETITION, EXHIBIT 8.

ance of net profit provided for in paragraph hereof- numbered
8 may, at the option of the party of the second part, be made
wholly or partly by promissory notes of the party of the sec¬
ond part bearing interest at the rate of six (6) per cent per
annum and each payable at a date not later than three years
from the date on which the payment for which it is issued is
due; provided, however, (a) that if, in any year it should
make payments in this manner to the party of the first part,
it shall for that year make payments in like manner to all of
the “Patents Company Licensees aforesaid” from whom it
may have leased “Licensed Motion Pictures” during that
year and who may be entitled to share in the balance of net
profit of that year provided for in paragraph hereof num¬
bered 8; (6) that if in any year it should make such payments
partly in cash and partly in promissory notes the cash shall
be apportioned among the several “Patents Company
Licensees aforesaid” according to the number of running feet
of “Licensed Motion Pictures” leased by each during that
year to the party of the second part, relatively to the total
amount of running feet leased by all to the party of the
second part during that year, and the notes shall be appoi-
tioned in like manner; and (c) that all notes issued by it in
™ „3’.enr.t“ the several "Patents Company Licensees afore¬
said in full or partial payment as aforesaid shall be alike
as to form, date, rate of interest, duration and place of
payment; shall be paid by it without preference to one
payee over another; shall bo fully paid by it before any cash

ComTnuv ° J ifc in subso<luent years to “Patents

Company Licensees aforesaid” on account of their share as '

naidTf bala“Ce °f Det P1'°flt f0r S,lch yeai'8: «>'all be

paid before any payment is made on the notes issued in

alL8}U1»Seqnen y<3arS t0 "Patents Company Licensees
muflT s “count of ««ch share of the balance of net
profit, and shall share pro rata, according to their respective
face values in any money to be used by it for nmking p r
tial payments on such notes. h P

14 *s further mutually covenanted and agreed by and
asdierainnft pait es be^oto that, unless previous* termLted
after provided, this agreement shall continue until

-■\Xf ORIGINAL PETITION, EXHIBIT 8.

August 2G, 1019, tile date of expiration of the letters patent
^ aforesaid No. 707034.

12> 14 is further mutually covenanted and agreed that if
tll,! ,icense to the party of the first part referred to in para-
graph hereof numbered 2 be terminated prior to August 26,
1919» t,le date of “Piration of said letters patent No. 707934,

I*”) or if the license aforesaid to the party of the second part to
lease “Licensed Motion Pictures” from the party of the first
part and other “Patents Company Licensees aforesaid” be
terminated prior to August 26, 1919, the date of the expira¬
tion of said letters patent No. 707934, then and in either of
such cases this agreement shall at once terminate.

13. It is further mutually covenanted and agreed by and
between the parties hereto that if either party should know¬
ingly or through gross neglect or carelessness be guilty of a
breach, violation, or nonperformance of its covenants, con¬
ditions, and stipulations resulting in substantial injury to the
other party, and should, for the period of forty (40) days
after notice thereof from the other party, persist therein or
fail to correct, repair, or remedy the same, then and in such
case the party aggrieved may terminate this agreement by
giving notice in writing to the guilty party of its intention
so to do; it being, however, mutually covenanted and agreed
by and between the parties hereto that if the guilty party
should correct, repair, or remedy such breach, violation, or
nonperformance of its covenants, conditions, and' stipulations
within the said period of forty (40) days nfter such notice,
and should thereafter knowingly, or through- gross neglect or
carelessness bo guilty of a second breach; violation, or non¬
performance of its covenants, conditions, and stipulations,
resulting in substantial injury to the other party, then and
in such case the party aggrieved may terminate this agree¬
ment, by giving thirty (30) days’ notice in writing to the guilty
party of its intention so to do. Snell termination of the
agreement, however, shall not prejudice either party hereto
in the recovery of damngos because of any such’ breach,
violation, or nonperformance by the other party hereto.

14. It is further mutually covenanted and agreed that
in case of the termination of this agreement as provided

122

ORIGINAL PETITION, EXHIBIT 8.

for in paragraphs hereof numbered 12 and 13, or in case the
party of the first part should become bankrupt, then at the
end of the year in which either of these events occurs the
party of the first part shall he entitled to such a propor¬
tion of the balance of net profit for that year, ns herein¬
before defined, as the number of running feet of “licensed
Motion Pictures” leased by the party of the second part
from it during that year hears to the total amount of run¬
ning feet of “Licensed Motion Pictures” leased by the
party of the second part from all “Patents Company
Licensees aforesaid” during that year (“Licensed Motion
Pictures” manufactured for or purchased by the party of
the second part, as aforesaid, as well as motion pictures
leased to it by “Patents Company Licensees aforesaid”
produced from negatives made on its order, to be excluded).

15. All notices provided for in this agreement shall
he in writing, and shall be given by delivering the same to
the party of the first part or the party of the second part,
as the case may he, or to an officer of the party of the first
part or the party of the second part, as the case may be,
or by depositing such notice, postage prepaid, in any post
office of the United States, in a sealed envelope directed
to the party of the first part or the party of the second part,
as the case may be, at its last known post-office address,
to be forwarded by registered mail.

, 10. It is further mutually covenanted and agreed by

land between the parties hereto that any rights hereby
jgranted by one party to the other are personal to and
nonassignable by the latter without the consent in writing
(of the former.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above written.

Edison Manufacturing Company,
By Frank L. Dyer, Vice President.

In the presence of —

,T. J. Kennedy,
Wm. Pblzer,

Exhibit 9.

Reissued Letters Patent 12192.

United States Patent Office.

THOMAS A. EDISON, OF LLEWELLYN PARK, NEW
JERSEY.

To all whom it, may concern-.

Be it known that I, Thomas A. Edison, a citizen of the
United States, residing at Llewellyn Park, in the county of
Essex and State of New Jersey, have invented a certain new
and useful Improvement in Kinetoscopic Films (Case No.
928), of which the following is a specification.

The purpose I have in view is to produce pictures repre¬
senting objects in motion throughout an extended period of
time which may be utilized to exhibit the scene including
such moving objects in a perfect and natural manner by
means of a suitable exhibiting apparatus, such as that
described in an application filed simultaneously herewith
(Patent No. 493420, dated March 14, 1893). I have found
that it is possible to accomplish this end by means of pho¬
tography.

In carrying out my invention I employ an apparatus for
effecting by photography a representation suitable for repro¬
duction of a scene including a moving object or ■ objects
comprising a means, such as a single camera, for intermit¬
tently projecting at such rapid rate as to result in persistence
of vision images of successive positions of the object or
objects in motion as observed from a fixed and single point
of view, a sensitized tape-like film, and a means for so moving

124

ORIGINAL PETITION, EXHIBIT 9.

125

the film as to cause the successive images to be received
thereon separately and in single-line sequence. The move¬
ments of the tape-film are intermittent, and it is perferablc
that the periods of rest of the film should be longer than the
periods of movement. .... .

By taking the photographs at a rate sufficiently high as to
result in persistence of vision the developed photography
will, when brought successively into view by an exhibiting
apparatus, reproduce the movements faithfully and naturally.

I have been able to take with a single camera and a tape-
film as many as forty-six photographs per second, each hav-
inc a size measured lengthwise of tlie tape of one inch, and I
have also been able to hold the tape at rest for nine-tenths
of the time; hut I do not wish to limit the scope of my
invention to this high rate of speed nor to this great dis¬
proportion between the periods of rest and the periods of
motion, since with some subjects a speed as low as thirty
pictures per second or even lower is sufficient, and while it
is desirable to make the periods of rest as much longer than
the periods of motion as possible any excess of the periods of
rest over the periods of motion is advantageous.

In the accompanying drawings, forming a part hereof,
Figure 1 is a plan view, with the top of the casing removed,
of a form of apparatus which I have found highly useful for
the taking of the photographs. Fig. 2 is a vertical longi¬
tudinal section on line ® © in Fig. 1. Figs. 3 and 4 arc
enlarged views of the stop mechanism of the photographing
apparatus. Fig. 5 is a plan view of the shutter for the
photographing apparatus, and Fig. G is a perspective view
of a section of the tape-film with the photographs thereon.

Referring to the drawings, 3 indicates the transparent or
translucent tape-film, which before the apparatus is put in
operation is all coiled on a reel in the sheet-metal box or
case 1, the free end being connected to an empty reel in the
case 2. The film 3 is preferably of sufficient width to admit
the taking of pictures one inch in diameter between the rows
of holes 4, Figs. 2 and G, arranged at regular intervals along
the two edges of the film, and into which holes the teeth of

the wheels 5, Figs. 1 and 2, enter for the purpose of posi¬
tively advancing the film. When the film is narrow, it is
not essential to- use two rows of perforations and two feed-
wheels, one feed-wheel being sufficient. Said wheels are
mounted on a shaft G, which carries a loose pulley 7 — that is,
a pulley frictionally connected to its shaft and forming a
yielding mechanical connection. This pulley is driven by a
cord or belt 8 from a pulley 9 on the shaft 10, which shaft
is driven by means of the beveled gears 11 12. The wheel
12 is preferably driven by an electric motor 13, which when
the apparatus is in use is regulated to run at the desired
uniform speed, being controlled by the centrifugal governor
14 and the circuit-controller 15 in a well-known manner. On
the shaft 10 is another pulley 1G, which is connected by a
cross-belt 17 to a pulley 18, also frictionally connected to its
shaft, and which carries the reel to which the tape is con¬
nected in casing 2. The film passes from the casing 1 through
a slit formed by the edge 19 and the sliding door 20, which is
normally thrown forward by the spring 21, Fig. 2, with suffi¬
cient force to clamp the film and hold it from movement.
When the door 20 is retracted by pulling on the rod or string
22, which is connected to the arm 22', the film is liberated
and allowed to advance. Film-case 2 is provided with a
similar door, but the device for moving the door is not
illustrated. This arrangement of the sliding door not only
holds the film, but it tightly closes the casing, thus excluding
light and protecting the sensitive film. The casings or
boxes 1 2 are removable, so that they, with the inclosed film,
may be taken bodily from the apparatus; The shaft G, here¬
tofore referred to, is provided with a detent or stop-wheel 23,
the form of which is most clearly shown in Figs, 3 and 4.
Tlie wheel 23 -is provided with a number of projecting teeth
24,. six being shown, which teeth are adapted to strike suc¬
cessively against the face of the cooperating detent or stop-
wheel 25 on the shaft 2G, which is the armature-shaft of the
motor or a shaft which is constantly driven by the motor.
The wheel 25 has a corresponding number of notches 27 at
regular intervals around its periphery. These notches are

120 ORIGINAL PETITION, EXHIBIT 9.

of such size and shape that the teeth 24 can pa** through
them, and when the wheels 23 and 25 are rotated I«» tIie rirec-
tion indicated by the arrows each tooth in g„cce0ston will
strike the face of wheel 25, thereby bringing [jle film abso¬
lutely to rest at the same moment that an opening in the
shutter exposes the film, and will then pass tlu*0Uj.t* a notch*
allowing the tape-film to be moved forward n)|0tlier step
while it is covered by the shutter. To avoid t|le danger of
the wheel 25 moving so quickly that a tootli cnnnot enter
the proper notch, a laterally-projecting tool), is pro¬
vided adjacent to each notch. When a tooth 2iT stri1'03 a
tooth 24, the latter tooth will be guided by the (noth 29 into
the adjacent notch 27.

30 is a detent spring or pawl to prevent hnckwfl™! move¬
ment of the wheel 23.

I prefer to so proportion the parts above described that
the wheel 23 is at rest for nine-tenths of the tiine [,i order to
give to the sensitized film as long an exposure 88 practicable
and is moving forward one-tenth of the time and said
forward movement is made to take place thirty or’ „iore times
per second, preferably at least as high as forty.8,x times per
second, although the rapidity of movement or „ timber of
time's per second may be regulated as desired (0 give satis¬
factory results. The longer interval of rest of thc gjln insures
a good impression of the object projected o, croon and
results in a picture having clean and sharp ljne|l since the
film has sufficient time to become steady and Ovcrcome the
vibration caused by the sudden and rapid motion* of the
feed mechanism. On the shaft 26 or on any RuIt(1ble shaft
driven by the motor is a revolving disk 31, serving as a
sliutter for alternately exposing and covering » sensitive
film. This disk, which is continuously revolving i« provided
with six or any other suitable number of aimj.tlircs 32 at
regular intervals around it near the edge, thcv bring so
arranged that one of the apertures passes direc(tl«' between
the camera-lens 33 and the film each' time the (l])n j* brought
to rest, the light-rays passing through the oponin£r 33' and
falling on the film half-way between the reels 0n «-liich the
film is wound. 1

ORIGINAL PETITION, EXHIBIT 9. 127

34 is a device for adjusting the camera-lens toward or
from the film, and 35 is a device by means of which the opera¬
tor can focus the camera on thc object to be photographed.

Although the operation has been partially indicated in the
description of the apparatus, it will now be set forth more in
detail.

The apparatus is first charged with a sensitive tape-film
several hundred or even thousands of feet long and the motor
is set in operation. Since the spring 21 causes the door 20
to clamp the film, as already described, the loose pulleys 7 18
slip without pulling said film along; but when a moving
object— for example, a man gesticulating— is placed in the
field of the camera and the handle 22 is pulled the film is
released and the pulleys operate to pull the same along. At
the same time the reel in case 2 is rotated to wind up the film,
thus transferring it from the reel in case 1 to the reel in case
2. This movement is intermittent, the film advancing by
very rapid steps, which are definitely and positively controlled
by means of the peculiar detent or escapement described, and
a photograph is taken nfter each step.

While I do hot care to limit myself to any particular num¬
ber of steps, per second, there should be at least enough so
that thc eye of an observer cannot distinguish, or at least
cannot clearly and positively distinguish, at a glance a
difference in the position occupied by the object in the
successive pictures, ns illustrated in Fig. 7. A less speed in
taking the pictures will cause a trembling or jerky appearance
in the reproduced picture. When the movement of the
object being photographed lias ceased or the desired number
of photographs has been obtained, the apparatus is stopped.
The film is suitably treated for developing and fixing the
pictures, when it is ready for use in an exhibiting apparatus.
It will be observed that all the photographs on the film are
taken through the same camera-lens, which results in such
a uniformity 0f photographs as would be unattainable were
the photographs taken through different lenses.

65498-12 - 17

128

ORIGINA

\L PETITION, EXHIBIT 9.

Wliat 1 claim is—

1. An unbroken transparent or translucent tape-like
photographic film having thereon uniform sharply-defined
equidistant photographs of successive positions of an object
in motion as observed from a single point of view at rapidly-
recurring intervals of time, such photographs being arranged
in a continuous straight-line sequence, unlimited in number
save by the length of the film, and sufficient in number to
represent the movements of the object throughout an
extended period of time, substantially as described.

2. An unbroken transparent or translucent tape-like
photographic film provided with perforated edges and having
thereon uniform sharply-defined equidistant photographs of
successive positions of an object in motion as observed from
a single point of view at rapidly-recurring intervals of time,
such photographs being arranged in a continuous straight-
line sequence, unlimited in number save by the length of the
film, and sufficient in number to represent the movements of
the object throughout an extended period of time, substan¬
tially as described.

This specification signed and witnessed this 15th day of
December, 1903.

Thomas A. Edison.

Witnesses :

Frank L. DYEn,

Harry G. Waiters.

. DISTRICT COURT OP THE UNITED STATES
Fob tub Eastbbn District ok Pennsylvania.

United States of America, j

Petitioner, I

. ( .. No. 889.

) Sept. Sess., 1912.

Motion Picture Patents , Co; ami others, I
, . Defendants. I

New York City, October 21st, 1013.

Upon application of counsel for petitioner, counsel for
dcfeuduntH consenting thereto, the hearings were postponed
until 10:30 o’clock A. M.,' November 10th,- 1013, to be re¬
sumed at Manhattan Hotel. '

' New York City, November 10th, 1013.

The hearings were resumed pursuant to adjournment at
10:30 o’clock A. M., November 10th, 1013, at Manhattan
Hotel, New York City.

Present on behalf of the Petitioner, Hon. Edwin
P. Grosvenor, Special Assistant to the Attor¬
ney General.

J. R. Darling, Esq., Special Agent.

Present also, Messrs. Charles F. Kingsley George
R. Willis and Fred R. Williams, appearing
: for Motion Picture Patents Company, Bio¬
graph Company, Jeremiah J. Kennedy, Hurry
N. Marvin and Armat. Moving Picture Com-

Mr.^.I. H. Caldwell, appearing for Wiiliam Pelzer,
General Film Company, Thomas A. Edison,
Inc., Kalcm Company, Inc., Melics Manufac¬
turing Company, Patlie Freres, Frank L. Dyer,

1550 Frank L. Dyer, Direct Examination.

Mr. Henry Melville, attorney for George Kleine,
Essanay Film Manufacturing Company, Selig
Polyscope, George K. Spoor and W. N. Selig.

Mr. James J. Allen, appearing for Vitagraph
Company of America, and Albert E. Smith.

Mr. Caldwell: I want to note on the record the
withdrawal of my firm as counsel or attorneys for
Gaston Melies and the Melies Manufacturing Com¬
pany.

I will call Mr. Frank I.. Dyer.

Thereupon, FRANK L. DYER, the next witness called
hy defendants, of lawful age, duly sworn, deposed:

Direct examination by Mr. Caldwell:

Q. Where do you live, Mr. Dyer, and in what business
are you engaged? A. I live at Montclair, New Jersey, and
am President of the General Film Company.

Q. How long have you been the President of the Gen-
end Film Company? A. Since December, 1912.

Q. And prior to December, 1912, in what business were
you engaged? A. To July, 1908, I acted as general counsel
for Mr, Edison, and in addition my time was almost entire¬
ly occupied ns the executive head of his various corpora¬
tions. I was President of the National Phonograph Com¬
pany, a concern that manufactured and sold phonograph
records and also sold phonographs; I was general manager
of the Edison Phonograph Works, a concern that manu¬
factured Edison phonographs; I was Vice-President of the
Edison Manufacturing Company, a concern that manufac¬
tured and sold moving picture films and sold Edison Kinet-
oscopes, which were made by the Edison Phonograph
Works, and which also manufactured and sold Edison
primary batteries. I was President of the Edison Busi¬
ness Phonograph Company, a concern that sold Edison
business phonographs, which were made by the Edison
Phonograph Works. I was President of the Bates Manu¬
facturing Company, a concern that sold the Bates Number¬
ing Machine made by the Edison Phonograph Works. I
was Vice-President of the Edison Storage Battery Com¬
pany, a concern that manufactured and sold Edison Storage

4/ 0

Frank L. Dyer, Direct Examination.

Mr. Guosvbnok: Of what?

The Witness: Director of the Edison Portland Cement
Company, a concern that manufactured and sold Edison
Portland cement. I was a Director of several of the
foreign corporations, whose names I do not now recall, and
had the executive management of the various concerns
which sold Edison products in Great Britain, France, Ger¬
many, Australia and Argentine. I was President of the
Motion Picture Patents Company from December, 190S, to
November, 1912, and I have been a Director of the General
Film Company since its formation.

By Mr. Caldwell:

Q. Now, prior to 1908, in what business were you en¬
gaged? A. I was general counsel for Mr. Edison, from
April, 1903, to July, 1908, and organized at the Edison
Laboratory, a well equipped legal department that had
charge of Mr. Edison’s patents and legal work.

Q. At what time was the Edison Manufacturing Com¬
pany succeeded by the Thomas A. Edison Company, Incor¬
porated? A. I think it was March 1st, 1912, but it may
have been March 1st, 1911, that, at my suggestion the
name of the National Phonograph Company was changed to
Thomas A. Edison, Incorporated, and at that time the Na¬
tional Phonograph Company acquired the property of the
Edison Manufacturing Company, the Bates Manufacturing
Company and the Edison Business Phonograph Company.

Q. You were President, were you not, also, of the Thomas
A. Edison Company, Incorporated? , A. Yes, I was Presi¬
dent of the Thomas A. Edison Company, Incorporated, from
tlie time its name was changed until I resigned.

Q. And one of the principal businesses of that company
was the motion picture business, was it not? A. No. The
principal business of the Thomas A. Edison Company, In¬
corporated—

Q. (interrupting): 1 said one of the principal busi¬
nesses? A. The principal business of the Thomas' A. Edison
Company, Incorporated,’ whs the handling of Edison phono-

1552 Frank L. Dyer, Direct Examination.

graphs. That business was probably as large as the. entire
moving picture business of the country, but the business of
handling moving picture dims was an important part of
its business.

Q. Prior to 1903, you were cngnged actively in the prac¬
tice of patent law, were you not? A. I was.

Q. Hnve yon ever made any particular study of the in¬
dustrial arts in connection with your work as a patent at¬
torney? A. Yes, I have always been interested in me¬
chanical matters. I am a member, or rather, tin associate
member of the American Society of Mechanical Engineers,
my membership in that society being based on my work as
an inventor.

Q. What connection, if any; did you have with the
business end of the motion picture business after yon went
with Mr. Edison, in 1008, and up to the time when you left
him? A. T had the executive charge of the motion picture
business, and kept pretty close track- of it Of course, my
work was very general. I was quite familiar with the manu¬
facturing operations and frequently visited the studio.

Q. You had occasion also to frequently visit and inspect
the so-called manufacturing plant at which the positives
were printed? A. Oh, yes; I was entirely familiar, with the
plant, and frequently went to it, and was consulted about
changes that were made from time to time, and enlarge¬
ments of the plant. We also changed the process of develop-’
ing, while T was connected with Mr. Edison’s companies.

Primarily, the developing was carried , out on drums, and
later the so-called ruck system was introduced.

Q. In your capacity as Vice-President of the company,
and subsequently, President of the Edison Manufacturing
Company, having general supervision of the business of the
company, were you to some extent familiar with the opera¬
tions of your competitors? A. Yes. I have visited, the
plants of a good many of our competitors, both the licensed
manufacturers and the independent .manufacturers, and, r
know generally that the manufacturing operations nre about,
the same in all. the plants I hnve visited. I think the Edison W?

plant- represented a very good development of the-art, ;

Frank L. Dyer, Direct Examination, 1553

The Witness: By "plant” I would include the studio,
and also, in the case of the Edison Company, the part of
the factory that was devoted to printing and developing
operations.

By Mr. Caldwell:

Q. State what suits were brought by Mr. Edison or the
Edison Manufacturing Company on the patents owned by
him pertaining to the motion pioture art, at any time prior
to January 1st, 1909. You may commence, if yon will, with
the original Letters Patent issued in 1897, was it not, cover¬
ing the camera and film? A. Yes. When the original
patent was granted in 1897, suit was commenced against
the American Mutoscope & Biograpli Company, now called
the Biograph Company, and that suit was very vigorously
prosecuted. It was brought on to final hearing before
Judge Wheeler, and Judge Wheeler handed down an opin¬
ion sustaining the patent and holding it to be infringed,
both as to the claims on the camera and on the film. On
appeal to the Circuit Court of Appeals the Court held that
the claims were too broad; and therefore, the patent, was
reissued in two parts, one covering the camera, and the
other, the film. Suits were also brought on the original
patent, as I remember, against the Vitagrapli Company of
America, Eberhard Schneider, and, I think, Lubin, of Phila¬
delphia. My recollection is that an injunction was secured
under the original patent against the Vitagrapli Company,
and, I think also, against Eherlinrd Schneider.

Mr. Grosvenor: Can you give any dates pertain¬
ing to these suits, relating to the suits, ns you are
testifying very generally, as I understand?

Mr. Caldwell: We will follow this up later with
the specific dates.

The Witness. I am not able to give exact dates, Mr.
Grosvenor. I know that the decisions of Judge Wheeler,
and of .the Circuit Court of Appeals, are printed in the :
Federal Beporter, but I do not remember the dates.

Mr. Grosvenor: They have already been intro¬
duced in evidence.

1554 Frank L. Dyer, Direct Examination.

1 The Witness: I didn’t know that.

Mr. Grosvenor: Can’t you give the dates in re¬
spect to these other matters you hare testified to, for
instance, these injunctions you have named in those
suits?

The Witness: No, I am not alile to, except that it was
subsequent to the granting of the original patent and be¬
fore the final granting of the reissued patent.

2 By Mr. Caldwell :

Q. That would be then, approximately, between 1807
and. 1902? A. Yes. After the first two reissued patents
were granted, suits were again brought against, the Bio¬
graph Company, and I think also against the Vitagraph
Company, Lnbin, Selig, Melies, and perhaps others.

Q. How about the Pathe Cinematograph Co., and J. A.

Beret, or was there a suit brought against them? A. I don’t
recall that, but I think so. The suit against the Biogrnph
Company on the camera patent was pressed ns vigorously
8 as possible, and that suit was brought on for final hearing
before Judge Bay, who held that while the claims were
valid, they were not infringed. On appeal to the Circuit
Court of Appeals, the Court held that certain claims of
the camera reissue pntent were infringed by the so-called
Warwick camera, used by the Biograph Company, and, I
think, an injunction granted. Suit on the film reissue was
started, and it developed that the defense of the Biogrnph
Company would be that the reissue instead of having nar¬
rowed the claim or claims on the film, as was the intention,
actually broadened the claims. This contention was bnsed
4 on the fact that the word “equidistant,” which nppenred in
the original film patent claim, did not appear in the first
reissue patent on the film. This was a clerical error, which
was corrected by reissuing the film pntent a second time;
but it necessitated the dropping of the suits that had been 0y

brought on the first film reissue. My recollection is that
these suits, however, were renewed against the Biogrnph
Company and the other infringers on the second reissued
film patent. What, date did you want me to go lip to?

Frank L. Dyer, Direct Examination.

1555

Mr. Grosvenor: Reissued film patent or camera
patent?

The Witness: Film patent.

By Mr. Caldwell:

Q. You refer now to No. 12,192, the second reissued film
patent? A. Yes. What date did you want me to go up to?

Q. Up to the formation of the Motion Picture Patents
Company? A. With this date in mind, I am certain that
suit was brought on the second film reissue patent No. 12,-
192, against the Biograph Company, because, that suit was
being pressed in December, 190S.

Mr. Grosvenor : When was that suit brought?

The Witness: I don’t remember, I don’t recall that—
I know we were taking testimony then.

By Mr. Caldwell:

Q. Was it brought shortly after the second reissue? A.
I think so; and a suit was also brought on this second ca¬
mera patent in the Summer of 1908, against infringing
theatres, principally in Chicngo, but nothing became of
this suit.

Mr. Grosvenor: Those being brought in 1908?

The Witness: Yes, in the Summer of 1908, and nothing
became of this suit, because, about that time it seemed rea¬
sonably certain that the' differences between the two con¬
tending interests would be composed, as subsequently was
the case, resulting in the formation of the Motion Picture
Patents Company.

By Mr. Caldwell:

■ Q. Have you stated the result of the second suit against
the Biograph Compnny on the- reissue letters patent affect¬
ing the camera? A. The result of that suit, ns I recall,
was the granting of an injunction, enjoining the Biograph
Company from using the Warwick camera, which was a

3650 Frank L. Dyer, Direct Examination.

positive feed camera of the type now universally used,
and which is known generally as the Edison camera. I
might say, concerning this camera reissue patent, that a
motion for a preliminary injunction was argued against the
Selig Company in the Fall of 1907, and an injunction
granted, or at least, we were in position to take an injunc¬
tion, and I think an injunction was also granted against
Lubin, in Philadelphia, on the camera reissue.

Q. Is it not a fact that Judge Kohlsant of the United
States Circuit Court in Chicago, handed down an opinion
directing the issuance of an injunction against Selig? A.
That is so.

Q. Do you recall the date of that decision? A. I do not,
except that was in the Fall or early Winter of 1907.

Q. Had proceedings for an accounting been commenced
against the Biograph Company after the decision of the
United States Circuit Court of Appeals early in 1907? A.
Yes, these proceedings were being gone ahead with, and, as
I remember, were in charge of Mr. Bull.

Q. Were they pending at the time of . the settlement of
the so-called warfare between the Edison and the Biograph
interests? A. Yes.

Q. Do you recall what happened in the suit that you
brought against Luhin under the second camera re-issue?
A. Not specifically, except that as I remember it, we either
had an injunction against Lnbin or were in a position to
take an injunction.

3Ir. Grosvenor: May I interrupt with a question?
Mr. Caldwell, do T understand that, yon are going to
submit a list or memorandum witli dates respecting
all this?

Sir. Caldwell : We expeet to do that. yes.

Mr. Grosvbnor: I suggest that before you ex¬
amine the witness in these matters, that you have
that list ready, so that lie can refresh his recollec¬
tion and we can proceed more intelligently.

Mr. Caldwell: That is a question of the order
of proof. I think that it would be convenient to
have that list ready, hut it does not happen to be
ready at the present time.

Mr. GnosvENOn : I am afraid this testimony is
going to be somewhat misleading if it is going to be

Frank L. Dyer, Direct Examination. 1557

given by these general conclusions and if the wit¬
ness has not anything before him to refresh liis recol¬
lection.

Mr. Caldwell : I do not think so. I do not think
the witness will bo intentionally misleading.

Q. Now', I think you have stated that suits were brought
against Ebcrhard Schneider and the Vitagraph Company
and Melies, Pathe Cinematograph Company and J. A. Berst.
Do you know what happened in those suits? What the re¬
sult of them was? A. Are you speaking now of the re-is¬
sue?

Q. The re-issue. A. Those suits were held up pending
the determination of the Biograph suit, except as I have
stated, tile motion for preliminary injunction against
Selig and possibly also, against Dubin.

Q. After the decision of the United States Court of
Appeals, the second decision in the Biograph case, which,
ns you have stated, was followed by the decision of Judge
Kohlsant in Chicago, holding that the so-called Lumiere
and Selig cameras were also infringements of the Edison
camera, what happened?

Mr. Gbosvenor : I object to this testimony so far
as it purports to give the conclusions or opinions of
the Court, the proper evidence being those opinions;
and then, I further object to this last question ns
in my opinion, he is stating tlmt the witness 1ms
testified to certain tilings, which it is my under¬
standing he has not testified to thus far.

Sir. Caldwell: The principal opinion to which
I refer, you have already introduced in evidence.
Tlie opinion of Judge Kohlsnnt is, however, not in
evidence as yet. We will put it in.

By Mr. Caldwell:

Q. Well, what happened in the Fall of 1907, or Winter
of 1907 and 1908, Mr. Dyer? A. With the successful ter¬
mination of the litigation in favor of the Edison camera,
patent, which was held to cover all existing practical mo¬
tion picture cameras —

1558

Frank L. Dyer, Direct Examination.

1550

Mr. Grosvenor (interrupting) : I object to tliia
as being merely tbe statement of the conclusion of
the witness as to what the decision did hold, and,
therefore, as being improper.

Tbe Witness (continuing) : And since these cameras
were being used by all the American manufacturers who
had, during the Edison-Biograpli litigation, developed their
enterprises, they realised that their position was pre-

Mr. Grosvenor (interrupting) : I object to that
ns improper, stating what other people realised, and
then giving the reason as in his judgment

By Mr. Caldwell:

Q. Is that the result of conversations that you had with
the manufacturers, Mr. Dyer? A. Yes.

Mr. Grosvenor: Then, call the manufacturers to
testify as to the reasons that actuated them.

Mr. Caldwell: I think it is competent for the
witness to testify to general conditions prevailing
at the time, as the result of which, certain action
was taken.

Mr. Grosvenor: He 1ms not qualified to testi¬
fy as to what motives may have actuated others. I
■ want to enter my objection. Now, proceed, witness.

The Witness (continuing): Because all the American
manufacturers realized that the Edison Company would be
successful, as it was in the case of the Selig Company, in'
enjoining them from the use of their cameras, and, there- •
fore, from making motion pictures in the United States,
therefore, all the American manufacturers, with the ex¬
ception of the Biograph Company, came to the Edison
Company and received licenses under the Edison camera
and film re-issues to permit them to lawfully carry' on
their business. These licenses were granted in the early
part of 1908.

Mr. Grosvenor : Test suit of what?

Mr. Caldwell : On the camera.

Mr. Grosvenor : Which suit are you referring to
against the Biograpli Company?

Mr. Caldwell : I am referring to the second suit.

A. Well, in the first place, the Biogrnph Company al¬
ready had been sued under the original patents, and we
felt that it was up to us to test the re-issue patents in the
second suit against them, and not give up in our efforts to
enforce the rights of the Edison Company. Then, there
was also more or less personal feeling between the two con¬
cerns, a feeling of bitterness, but principally as a matter
of legal tactics, the suit against the Biograph Company
was selected os the test case, because the Biograph Com¬
pany was making use of two cameras, one known as the
Biograpli camera, and the other, the Warwick camera.
There was some doubt as to the infringement of the Bio¬
graph camera, but we felt that we ought to proceed against
both, and then, if we were successful, there would be no
difficulty in getting preliminary injunctions against other
infringers. Or, if we were successful only on the Warwick
camera, as was actually the case, we still could get pre¬
liminary injunctions against other infringers. If, however,
suit had been brought against any other infringers, while
we would have been successful in securing an injunction,
yet, if we then went against the , Biograpli Company, the
question of the infringement of the Biograph, camera would ‘
- have to be gone all over again, and we considered that it
was therefore better to proceed with the suit against the
Biograph Company than against the others; in other words,
it was the most unfavorable suit.

Q. Was the Biograpli Company on active competitor of
the Edison Manufacturing Company at that time? A. Yes.

Q. Anil' its largest competitor among the domestic pro¬
ducers of- motion pictures? A. It was.

Q. And did that fact have anything to do with your

1560 Frank L. Dyer, Direct Examination.

selection of that case as the test case? A. Yes. That was
also a consideration.

Q. Now, what were the considerations that led Mr. Edi¬
son to conclude to license these infringers under his patents
instead of stopping them altogether?

Mr. GROSVHNOit: I object to this .question as being
improper in asking as to the reasons that actuated
a third person and not the person testifying. The
proper way is to call the person respecting whom
the question is asked.

Mr. Caldwell: This witness at that time was
the active representative of Mr. Edison, who conduct¬
ed these operations.

Mr. Grosvenor: He is qualified to testify the
reasons that may have actuated himself in giving ad¬
vice, but certainly he is not qualified to testify as
to Mr. Edison.

Q. These licenses
from Mr. Edison, wei
being fully explained

rare issued pursuant to instructions
they not, Mr. Dyer? A. Yes. After
to him and having been approved by

The stenographer repeats the question as follows:

Q. Now, what were the considerations that led Mr.
Edison to conclude to license these infringers under his
patents instead of stopping them altogether? A. Mr. Edi¬
son wanted, to make as much money as possible out of his
patents) and therefore, by these licenses —

Mr. Caldwell (interrupting) : Before you pro¬
ceed, Mr. Dyer— these patents at that time were
owned by the Edison Manufacturing Company, were.
. they not?

Frank L. Dyer, Direct Examination; 1561

By Mr. Caldwell : ' 1

Q. That was a corporation, wasn’t it? A. That was a
corporation, owned practically by Mr. Edison.

Q. And you were the Vice-President of that corporation,
were yon not? A. I was.

Q. And practically charged with the executive manage¬
ment of Hint company? A. Not at that time. I was gen¬
eral counsel.

Q. You were Vice-President of the company? A, Not at
that time. I was the Vice-President, in July, 1908. At that
time, I was the general counsel ndvisiug with Mr. Gilmore, 2
who was the Vice-President.

Q. Yon may proceed. A. Mr. Edison —

Q. (interrupting) : By Mr. Edison, you mean now the
Edison Manufacturing Company, do you not? A. Yes. The
Edison Manufacturing Company whs practically Mr. Edi¬
son, because he owned nil the stock, or substantially all the
stock, of it — wanted to make ns much money as possible
out of his patents. He felt this could be done only by li¬
censing concerns to use the patents upon the payment of
royalties. It was also felt by the Edison Manufacturing
Company that the concerns that were in business and that 3
were infringing, had probably entered the field without a
proper knowledge of the patent situation, ai>d that it would
be harsh and oppressive to force them to retire. Further¬
more, the Edison Manufacturing Company did not have
the faciliHes to supply the market for motion picture films
at that time, and if the company had pressed its advantage
to its ultimate conclusion, it could not have supplied the
motion pictures that it would drive out. These, I think,
were the principal reasons why it was decided to license in¬
fringers instead of trying to close them up.

Q. Did those who were licensed comprise all ot those 4
engaged in business at that time, with two exceptions? A.

Yes. All the manufacturers were licensed except the Bio¬
graph Company, and the only outsider was Mr. Kleine, who
was an importer of films, and who allied himself with the
Biograph interests.

Q. One of the witnesses called by the petitioner in this
case, Mr. Swaab, has testified that in 190S, and prior there¬
to, the films were not sold as patented articles. . Is that
statement correct so far as the films sold by Mr. Edison or

1503 Frank L. Dyer, Direct Examination.

1 tlio Edison Manufacturing Company are concerned? A. No,
it is not correct, The Edison films were stated to be pat¬
ented, and, I think, the date of the patent was printed as
part of tlie main title of eacli film, so that the patent date
would be thrown on the screen when the film was project¬
ed. I am quite sure also that the fact that the film was
patented was extensively advertised by the Edison Manu¬
facturing Company and also, that the fact that the film
was patented was also marked on the boxes containing
them. I think this information was disseminated ns widely
as possible by the Edison Company.

3 Q. State what part, if any, you took in bringing about
the so-called Edison license arrangement in 1008? With
what manufacturers you conferred, if any, before the li¬
cense agreement was put in the form in which it was final¬
ly executed. A. The first knowledge . I had specifically of
any proposition to grant licenses was early in 1908. Mr.
Alexander T. Moore, at that time manager of the ICinet-
ograph department of the Edison Manufacturing Com¬
pany, came into my office at Orange, and handed me a pro¬
posed license agreement between the Edison Company and
Patlie Frores, and asked me to look it over and advise him

3 if it was correct in form. I took up this agreement with
Mr. Gilmore, who at that- time was Vice-President of the
Ellison Company, and thereafter the license agreement was
developed by Mr. Gilmore and myself. I do not recall what
the exact form of the first agreement was that Mr. Moore
submitted to me, or what suggestions in the final agree¬
ment were made by Sir. Gilmore, or what by myself. We
wanted to get an agreement that would be acceptable to
Patlie Freres, because that concern was a dominating factor
in the motion picture business at that time.

4 Q. Commercially, you mean? A. Commercially. And
we felt that the contract that would be accepted by Patlie
Freres would be acceptable to the other proposed licensees.
This work took place in the early part of 1908, and the
agreements were executed, ns I remember, in the Spring of
that year. The only manufacturer that I recall talking
with at the time when the form of the contract was being
discussed, was Mr. Berst. I think I also: saw some of the
manufacturers at the time the agreements were executed
by them, but I do not recall anyone specifically, except Mr.

Frank L. Dyer, Direct Examination. 1503

Spoor, who I remember very well coming down to New York 1
ft for the purpose of executing liis license agreement.

Q. You have stated that these agreements were executed
in tiie Spring of 1908. I want to call your attention to the
date of the agreement between the Edison Manufacturing
Company and the Kalein Company, which is attached to
the answer of the Edison Company in this case, and which
is in evidence as Petitioner’s Exhibit No. 92, and I ask you
to look at that date and see if that refreshes your memory
as to the time when these license agreements were executed?

A. Yes. In referring to the Spring, I had in mind, possibly
the 1st of February.

Q. What was the date of that agreement? A. The date
of this agreement is the 31st of January, 1908.

Q. That is about the time when the other agreements
were executed, was it? A. I think that is true of all the
agreements, except in the case of Patlie, and there was
delay in executing the Patlie agreement, as I remember it,
owiug to the fact that Mr. Berst stated that the actual ex¬
ecution of the agreement had to be first referred to his prin¬
cipals in Paris. He stated lie had not any doubt that
they would approve it, lint lie had to get their formal con- g
sent first, as I remember it.

Q. But in point of fact, did not Patlie Freres commence
to operate under the agreement at the same time as the
other licensees? A. He did.

Q. All of these agreements were substantially uniform,
were they not, in terms? All alike, with two exceptions?

A. Yes, sir. They were all alike, except that in the case
of the Patlie Company and in the Melies agreement, there
was either a separate agreement, or else the main agree¬
ment was modified to provide that those concerns should
be given the right to import foreign negatives from which 4
positive prints could be made, and also to import, under
certain conditions, foreign made positives. Those two con¬
cerns were the only ones of the licensees who bad foreign
_ affiliations. The Melies Manufacturing Company were not

W importing negatives, and therefore, it was not necessary

that their licenses should include this privilege.

Q. Why were all of these agreements made uniform in
character? A. As a matter of business fairness, we felt
that all the licensees should be treated alike. It was also
more convenient to use the common, form.

15G4

1565

Frank L. Dyer, Direct Examination.

Q. When yon took np with the exchanges under the Edi¬
son regime, the matter of contracts, were uniform contracts
made with each exchange? A. Yes, sir.

Q. Why did you consider that that was necessary? A.

Because it would have been an endless task to have nego¬
tiated separate agreements with a large number of ex¬
changes. It was much more convenient and ranch more
fair to treat them all alike.

Q. It is in evidence that there was a conference or con¬
vention of motion picture men, principally exchange men,
in the City of Buffalo, early in 1908. Were you present at
that conference or convention? A. I was. I went there
witli Mr. Gilmore.

Q. Will you state what transpired there, so far as yon
know? A. That was a convention of a large number of ex¬
changes. I think most of the exchange men of the country
were there ; certainly 'the most important exchange men were
there. It was a meeting, as I recall, of a body known as
the Film Service Association. At that meeting I addressed
tiie members of the Association and explained to them that
the Edison camera patent had been sustained in our suit
against the Biograph Company, and that all the American
manufacturers except the Biograpli Company had decided
to recognize the Edison patents, take licenses under them,
and pay royalties to the Edison Company, and that those
licenses were subject to certain reasonable conditions. I
stated that up to that time the exchanges, in handling film
that had not been licensed under the Edison patents, had
infringed those patents just ns effectively as if they had
made the film themselves, and that it was the purpose of
the Edison Company to license exchanges under the Edison
patents, so that they could handle licensed films legitimately
and without danger of infringement. And at that time I
read or explained the provisions of the proposed exchange
license to the several exchanges, so that they would un¬
derstand it. I also had several of the exchange men come
np to me afterwards and ask questions about the proposed
exchange license, and I endeavored to make it clear to them I?

what it was designed to cover.

Q. Was any objection made, so far ns you recall, ns
to the terms of the exchange license? A. No. The exchange '

men seemed to be very hopeful that, as a result of the cessa¬
tion of the warfare between the conflicting interests and

Frank L. Dyer, Direct Examination.

the licensing of the industry, that conditions would irn-
# prove, so far as their business was concerned. I think that

they generally approved the exchange license, and I do not
recall that any of them objected to it.

Q. Did any of them express any fear that the exchnnge
business, if conducted under the conditions that had been
prevailing theretofore — that it would not last long? A.
That feeling seemed to be in the atmosphere.

Q. Do you recall, Mr. Dyer, a provision in the license
exchnnge agreement between the Motion Picture Patents
Company and the exchange, by which the exchnnge is ob¬
ligated to lease a minimum of twenty-five hundred dollars’
worth of film per month? Do you know what the origin
of that provision was? A. Yes, I think the origin of that
prevision was one of the rules of the Film Service Associa¬
tion that the exchanges had imposed upon themselves, pro¬
viding that no exchange should be a member of the Asso¬
ciation unless it purchased twelve hundred dollars’ worth
of film per month.

Q. I call your attention to Petitioner’s Exhibit No. 2,
page 527 of the record, which is Article II of the by-laws
of tiie Film Service Association, and ask you to read Sec¬
tions 2 and 3 of those by-laws, and see if that is what you
are referring to ns the self-imposed condition by the ex¬
change men.

Mr. Grosvbnor: I object to all this ns immaterial.

A. Yes, sir. The two sections rend ns follows:

“Section 2. For the purpose of membership in
this Association a ‘legitimate film-renting business’
shall be . one equipped to do a self-sustaining film-
renting business independent of any other office or .
concern, that purchases new film for renting pur¬
poses to the average amount of at least $1,200 per
month.

'w) “Section 3. Any eligible individual, partnership

or corporation desiring to become a member of this
Association shall sign a written application for mem¬
bership, stating the name' and office address of the
applicant, the names of the partners, the names of
tiie officers or directors, if a corporation, and the

1506

Frank L. Dyer, Direct Examination.

1567

name of the person who will represent the member¬
ship in the Association in the case of a partnership 0

or corporation, that in how many, if any, moving
picture shows the applicant is interested, either di¬
rectly or indirectly, and the names under which they
are operated, and whether the applicant will, if
elected to membership, give a pledge not to rent film
to any person or persons whom the applicant knows
to be re-renting it.”

This is the lmsis of my previous answer.

Ily Mr. Caldwell:

Q. After the formation of the Patents Company, the
minimum requirement was changed from $1,200 to $2,500,
was it not? A. Yes, sir.

Q. And can you assign any reason why the minimum
was increased under tiie Patents Company licensing ar¬
rangement? A. My recollection is that this increase was
made at the suggestion and request, of tiie exchange men
themselves, who represented to ns that at that time the
exchange that did a smaller business than $2,500 per month
in the purchase of films, would not be self-sustaining, and
therefore, would he open to the teriiptation of objectionable
practices, particularly duping, which was a common prac¬
tice at that time. I know that there were at least three
good sized duping plants in Chicago, Philadelphia and San
Francisco, that I was informed were doing a prosperous
business. Duping was a great vice.

Q. Could an exchange satisfactorily serve its custo¬
mers if it took less than that amount of film per month? A.

I do not think so.

Q. Did the Edison Manufacturing Company, or, as far
as you know, any other manufacturer, have nnything to do
with the preparation of tiie by-laws of the Film Service
Association? A. No, sir.

Q. Was the Edison Company a member of the Film Serv- ry

ice' Association? A. No, sir.

Q. Do you know whether any of the other mnnufac- ,
turers were members? A. I don’t know personally, but
there were some manufacturers, namely, the Vitagrapli
Company, Babin, and Spoor, who were interested in the

exchange business, and it is probable that those manufac-
0 turers or individuals connected with them, were members of

the Association. I am quite sure that Mr. Rock was a mem¬
ber of the Association, representing the Vitagrapli Com¬
pany. I would like to say, however, that the Vitagrapli
Company of America, which is essentially a producing con¬
cern, was different from the American Vitagrapli Company,
which was the exchange concern. They were two corpora¬
tions, but the trade frequently confused them.

Mr. Grosvbnor: They were owned by the same
people?

The Witness: By practically the same people, yes, sir.
By Mr. Caldwell: ■

Q. Mr. Swanson, a witness called on behalf of the
Government, lias testified that all of the manufacturers
were members. Then that statement is inaccurate? A.
Absolutely.

Q. I show you Petitioner’s Exhibit No. 92, introduced
in evidence on page 368 of the record, but not copied in
the record, but identified ns the exhibit attached to the
answer of Thomas A. Edison, Incorporated, and the same
being the license agreement between the Edison Manufac¬
turing Company and the Knlem Company, dated January
31st, 1908. Do you identify that as one of several similar
agreements executed between the Edison Manufacturing
Company on the one side, and certain other persons ns li¬
censees? A. Yes, sir.

Q. With what other persons were similar agreements en¬
tered into at or about that time? A. S. Lubin of Phila¬
delphia, later known as the Lubin Manufacturing Company;
the Essanay Company of Chicago, Selig Polyscope Com¬
pany of Chicago, Pathe Freres, the Vitagrapli Company; and
George and Gaston Melies. In the case of the Pathe and
a Melies licenses, they were the same, except that they pro-

. vided. us I have before explained, for the importation of

foreign negatives and the printing of positives in this coun¬
try, but whether this clinnge was in the agreement itself
or the subject of a supplemental agreement, I do not now

1508 Frank L. Dyer, Direct Examination.

Q. At tlie time these agreements were entered into, the
Edison Manufacturing Company, the licensor, was itself Q

actively engaged in the production of motion pictures, was
it not? A. Yes, it was one of the largest producers.

Q. And was it in active competition with these seven
persons and corporations that you have just named? A.

Yes, sir. Did I name seven? Did I have all of them?

Q. I think you have named seven. And after the execu¬
tion of these agreements, it continued in the business of
manufacturing motion pictures, did it not? A. Oh, yes.

Q. And in active competition with the seven licensees?

A. Yes, it was in active competition and developing all the

Q. So that at. the time these agreements were executed,
the Edison Company sustained a dual relation, did it not, to
the subject matter of these agreements? A. Yes.

Q. What was that relation? A. The Edison Company, in
the first place, was the owner of the dominating patents and
occupied the position of the licensor with respect to the
several licensees, and also was a manufacturer or producer of
motion pictures, and therefore occupied the relation of com¬
petitor with its own licensees.

Q. Did all of these agreements subject the licensor, that
is to say, the Edison Manufacturing Company, to the same
terms and conditions ns the licensees? A. All except the
payment of royalties.

Q. The value of a license to manufacture and sell under
a patent depends, in a large measure, does it not, on the
exclusiveness of the rights that are conferred, or, in other
words, the number of licenses to bo issued under the patent?

A. I think so. I think that is the general experience of
patentees.

Q. In negotiating the terms and conditions of these li- ■
censes with the various persons who' subsequently became li¬
censees, do you know what, if anything, was said by any of
them as to the number of licenses' that were to be issued?

Mr. Grosvhnor : Are you talking about the rental . O’

exchange licenses or the manufacturers’ licenses?

Mr. Caldwell: I am speaking of the manufac¬
turers’ licenses.

Mr. GnosvBNon: And this was prior to the for-

Frank L. Dyer, Direct Examination. 1509

mation of the Patents Company, and related to the
$ period of the Edison licensees, so for?

Mr. Caldwell : Exactly.

Mr. GuosvENOn: Thank you.

The Witness: Yes, sir; the idea was to confine the li¬
censes to those producers of motion pictures who were then,
in business, or at least those whom we knew of, and not to
extend the number ns new concerns entered the business,
unless the licensees agreed to it, or a majority of the licen¬
sees.

Q., Do you know whether a license was offered to the
Biograph Company and to George Kleine at that time? A.
Yes, sir, we offered a license to the Biograph Company, but
they refused to be licensed.

Q. Then the disposition of the Edison Company at that
time was to license the entire art ns it was then known, or
as it then existed? A. That is what we planned to do.

Q. But you could not agree with the Biograph Company
and George Kleine as to the amount of royalty to be paid, is
that correct? A. That is the reason why they did not ac¬
cept the licenses from the Edison Company.

Q. Do you know whether or not any of the persons or
corporations who entered into these license agreements with
the Edison Company, contemplated at the time making addi¬
tional investments in their business nfter obtaining licenses?

Mr. Gbosvenou : I object to that as immaterial.

A. Yes. I recall very well that after the licenses were
finally executed and the strain and stress was over, that
several of the licensees, notably the Vitagrapli Company, Mr.
Lubin, Mr. Selig, and Mr. Spoor, told me that they now felt
. that they were in position to go ahead with safety and invest
cupital in their business, so as to develop and greatly im¬
prove the character and tone of their pictures. The impres-
■ sion I got from them was that they had not made any more

W investments than were absolutely necessary, because of the

fear they had of losing their investment as the result of
patent suits.

Q. I call your attention to the provision contained in
Paragraph 20 of the exhibit which- 1 have already shown
yon. You may state what provision there was in that para-

Frank L. Dyer, Direct Examination.

1571

grnpli ns to tlie number of licenses which might he issued
under the patents nnd under what conditions additional
licenses might he issued. A. The paragraph in question
which appeared in all the other license agreements, provides
that in addition to the license of the Edison Company and
Kalem Company, six other similar licenses might he granted,
making a total of eight.

Q. A total of eight licenses, or a total of eight manu-
fncturers under the license, including the licensor?. A.
Making a total of seven licensees, and one licensor. The
agreement provides that additional licenses might he granted
by a plurality vote of the licensor nnd licensees, based on the
running feet of new subjects issued by the licensor and
licensees during the year preceding the taking of the vote.
Tlie paragraph also provides that in case of the termination
of any license, tlie licensor should hnve a right to appoint a
now licensee in place of the one that was ended.

Q. Why were the licensees granted a voice in determin¬
ing whether or not additional licenses might he granted?

Mr. Grosvbnor: This questioning refers not to
the Patents Company licenses, then?

Tlie Witness: No. These v

■c the Edison licenses.

■ Mr. Grosvbnor: Thank yon.

The Witness : By the grant of these several licenses, tlie
patent property or territory was divided practically into
eight parts, eacli manufacturer having one-eighth. Just exact¬
ly the same as in the case of an exclusive license, tlie one
licensee has the whole. Therefore, to grant an additional
license or licenses, would reduce the interest of each licensee.
Tlie licensees agreed to pay substantial royalties under the;
patents, based upon a certain understanding, namely, that
the number of licenses should be limited, and it seemed
entirely reasonable to me at the time and does so now, that
they should have a right to decide whether additional licenses
should be granted. I doubt very much if they would have
consented to pay the royalties they did if they had felt that
the Edison Company could indiscriminately license nnyone
who might appear in the field.

0 •

Frank L. Dyer, Direct Examination.

Q. Was there much discussion or controversy over the
question as to the amount of royal ty to be paid between tlie
Edison Company and tlie licensees, prior to tlie agreement?
A. Oil, yes.

Q. Before they arrived at an agreement? A. Oh, yes, that
was the result of considerable dickering hack nnd forth. We
were trying to get as much as we could, nnd the licensees
were trying to pay as little ns they could. That always hap¬
pens with license agreements.

Q. I call your attention to the following provision con¬
tained in Paragraph 4 of that license agreement, namely :
"That the licensor and licensee will use exclusively sensi¬
tized film approximately 1% of an inch or 35 millimeters in
width, or narrower, manufactured nnd sold in the United
States under authority from the licensor, nnd called in that
license agreement licensed film, and that they will not pur¬
chase or otherwise acquire or sell or otherwise dispose of or
deal in motion pictures produced on or by the use of any
other film than such licensed film, nor sell nor otherwise
dispose of any negative motion pictures.” What was the
purpose of limiting the licensees to the use of film 1% inches
or narrower? A. That was the standard width of motion
picture film, namely, 35 millimeters, and we were dealing
with the practical existing conditions at the time. The pro¬
vision regarding the use of narrower film was put in the
licenses because several of the licensees were discussing the
possibility of putting out a small household machine, and
we wanted the license to include the handling of film for
this purpose. The Patlie Company and the Edison Company
ns a matter of fact did, at a later date, put out machines of
that type, using film of a less width than 35 millimeters.

Q. It was never intended* or contemplated, however, that
the so-called household machine should ever give exhibitions
for profit; was it? A. No. The household machine was
siiiiply a refined form of toy. It was to be used only in the
homes. Something like a phonograph.

Mr. Cai-dwki.i, : i think this might be a conven¬
ient time to stop. I would like to examine Air. Dyer
on another subject now that I would not like to break

Mr. Grosvbnor:

had better have a little longer

Frank L. Dyer, Direct Examination.

session this afternoon then. We have lost about
twenty minutes out of the two hours.

The Examiner: Shall we meet again at 2 o’clock.
Mr. Caldwell : '2 :30, the usual time.

The Examiner: The hearing is adjourned until
2:30 o’clock this afternoon at the same place.

New York City, November 10th, 1913.

The hearings were resumed, pursuant to adjournment, at
2:30 o’clock P. M., November 10th, 1913, at aianhattan
Hotel, New York City. .

The appearances were the same as at the morning session.

Thereupon FRANK L. DYER resumed the stand.

Direct examination continued by air. Caldwell :

Q. air. Dyer, you have stated that the Edison films were
sold as patented articles both prior and subsequent to the
Edison licensing arrangement in 1908. I show yon a blue
label with the following printed on the back of it: “Edison
Clear Projecting Film. Subject.” Followed by some blank
lines on which to place the title of the picture. “Length. ...
Feet,” which is followed by this printing: “This film is made
and sold under the Edison Patent No. 589,108, dated August
81 1907. Imitation or duplication thereof will be prosecuted.
Manufactured by Edison Mfg. Co., Orange, N. J., U. S. A.,”
and I ask you if that is one of the labels that was in common
use in the sale of the Edison film prior to the time of the re¬
issue of the film patent? A. Yes. I recall seeing film boxes
containing this label at or about the time I moved down to
Orange, in April, 1903— possibly it was before that time,
because I spent a good deal of my time at the Edison Labora-

- Mr. Caldwell : I offer it in evidence.

Mr. GnosvnNon : I want to ask one or two questions
before I decide whether I will make objection. This
small round disk names only Edison Patent No. 589,-
168, dated August 31, 1897. Then, I suppose, this

Frank L. Dyer, Direct Examination. 1573

label was used before the decision of Judge Wallace
on that patent, which I have named, and before the
reissue, for the reuson that no reissues are named on
this label?

The Witness : It was used apparently before the reissue,
and after the date of ,tbe patent. The patent mentioned on
the label is the original patent.

Mt. Gbosvenor : Yes, but it does not state the num¬
bers of the reissues, or refer to the reissues, therefore
it is to be presumed the label was used during a period
• antedating the issue of the reissues?

Mr. Caldwell: That was my question.

The label offered is received in evidence and
larked “Defendants’ Exhibit No. 105. E. H.”

EDISON CLEAR PROJECTING FILM.
Subject

Length . Feet.

This Film is made and sold under the Edison patent
No. 589,168, dated August 31, 1897.
Imitation or duplication thereof
will be prosecuted.

Manufactured by

By Mr. Caldwell: .

Q. I show you another label with red printed matter on
the back, rending as follows: “Trade Mark. Thomas A.

1574.

Frank L. Dyer, Direct Examination.

1575

Edison. Patented August 31, 1897. Eeissued Sept. 30, 1902.

Eeissued Jan. 12, 1904. No.... Length.... Feet. Title,” Q

•with a space for the title of the subject, followed by this
printed matter: “Notice. This film is sold subject to the re¬
striction that it shall not be used for duplicating, or printing
other films from it. Any use of it for such purposes is an in¬
fringement of the above patents under which it is made and
sold. Manufactured by Edison Mfg. Co., Orange, N. J.,

D. S. A.,” and I ask you if that is a form of label that was
used on all motion pictures sold by the Edison Manufactur¬
ing Company subsequent to the dates of the reissued letters
patent referred to on the face of it, and up to the time of the
Edison .licensing arrangement in January, 1908? A. Yes; ns
I recali, this is a label that was being used in connection
with what was called “Class A Film.”

Mr. Cacdweli. : We offer that label in evidence.

The label offered is received in evidence and
marked “Defendants’ Exhibit No. 106. E. H.”

Defendants’ Exhibit No. 106. E. H.

Trade Mark
THOMAS A. EDISON
Patented August 31, 1897.

Eeissued Sept. 30, 1902. Eeissued Jan. 12, 1904.

No . . . Length . Ft.

Title . . . .

NOTICE

This film is sold subject to the restriction that it shall not be
used for duplicating or printing other films from it.
Any use of it for such purposes is an infringe¬
ment of the above patents under which
it is made and sold.

/ ' Manufactured by

EDISON MFG. CO., .

Orange, N. J.,

U. S. A. ,

By Mr. Caldwell:

® Q. Referring again, Mr. Dyer, to Petitioner’s Exhibit No.;

92, dated January 31, 1908, and to the provision contained
in paragraph 4, which provided that licensees should get their
raw stock from the manufacturer named by the licensor.
What was the purpose of confining the licensee to the use
of raw film manufactured and sold in the United States
by a person or persons authorized by the licensor? A. The'
purpose of this particular provision is this: The Edison
Company, as I have stated, in addition to being the owner
of the patents, and the licensor, was also the producer of
moving pictures, and, therefore, a competitor of the licensees.
The licensees were very jealous, apparently, of their busi¬
ness, and objected to the Edison Company, as a competitor,
knowing how much business they were doing. Therefore, the
provision was made that the royalties should be collected by
the licensed manufacturer of raw film from the several li¬
censees, and turned over to the Edison Company in bulk,
without divulging the amount that might be contributed by .
any individual licensee. Furthermore, the Eastman Kodak
Company, that was designated as the licensed raw film man¬
ufacturer, was the manufacturer of the best film available,
and we desired to have licensed pictures put out on the best
possible film so ns to gradually improve the condition of
the business The principal reason, however, waB to devise a
scheme by which the royalties could be collected without
divulging the amount contributed by each licensee.

Q. Did the Edison Company as the owner of the patents
have any special interest in the selection of a high grade of
raw stock? Did it have a separate interest there ns dis¬
tinguished from its interest as a manufacturer, and as the
owner of the patents? A. Naturally that is so, because onr
idea was to try to develop the business on a high plane so
that it would be prosperous, and become larger, and so that
the royalties would therefore be greater.

Q. What was the purpose of the prohibition contained
a in that license agreement against the sale of negative mo-

* turn pictures? A. Is that in the same paragraph?

Q. I think it is. Would the fact that the royalty was
based both on the amount of the film used in the negatives,
as well ns in positives, have any relation to that prohibition?
A. I think that is so. As I recnll, the purpose of this pro-

1576

Frank L. Dyer, Direct Examination.

liibition was to prevent a licensee, who had legally manu¬
factured a negative under the license, from disposing of that
negative to some one on the outside who might produce posi¬
tive prints therefrom without paying a royalty. We con¬
sidered it desirable in granting licenses to tie the camera and
film patents together, and prevent any possibility of the
licensees in any way rendering support to any outside in¬
fringers.

Mr. Ghosvenou : • In using that term “film patent”
in that sentence just read, are you referring to the
patent Eastman had?

The Witness: No, I am referring to the Edison reissue
film patent.

By Mr. Caldwell:

Q. Is that all you wanted to say on that subject? A. Do
you wish me to elaborate?

Q. No, I simply wanted to know whether you had finished
your answer? A. Yes.

Q. I call your attention to the following provision in the
same paragraph of this agreement: “The Licensor cove¬
nants and agrees, upon the execution of this agreement, to
furnish the licensee with the name or names of the manu¬
facturer, or manufacturers of such ‘Licensed Film’ from
whom the Licensor and Licensee shall purchase the same,
and the Licensor agrees also to keep the Licensee promptly
informed hereafter, from time to time, of the name or names
of any other or, additional manufacturer or manufacturers
authorized by the Licensor to make such ‘Licensed Film’ and
from whom the same may he purchased.”

Q. What name or names of manufacturers of raw film
did the licensor give to the licensees after the execution of
this agreement? A. The Eastman Kodak Company.

Q. Why was the Eastman Kodak Company selected? A.
It was known that the Eastman Kodak Company would be
selected because all the licensees were dealing with that
company and getting film from it. The Eastman Company
made the highest type of film then known, so that the quality
of the pictures would thereby be assured, and, at the same
time, the Eastman Kodak Company was a large and respon-

Frank L. Dyer, Direct Examination.: 1577

sible concern, and every one, both the licensor and the 11-
$ censeos, felt confident that the confidence required by the

license would be observed by the Eastman Company. The
Eastman Company, of course, was not specially referred to
in the license because we did not know wlmt the future would
develop, and every one felt, of course, that if a new film
should appear that was superior to the Eastman film, that
such film ought to be placed at the disposal of the licensees.

Q. Was the Edison Company in any way interested other
than as you have already stated in the Eastman Kodak Com¬
pany? A. Not at all.

Q. Was it the intent of the agreement to give the East¬
man Kodak Company a monopoly of supplying raw stock?
A. No.

Q. Now, I call your attention to another provision con¬
tained in the third clause of paragraph i of that agreement,
to the effect that the licensor will exact from each manu¬
facturer of raw film authorized by it to furnish or sell such
film to the licensees, an agreement in writing not to furnish
such motion picture film to anyone but the licensor and its
licensees — do you find that there? A. Well, it is a little dif¬
ferent — '

Q. (interrupting) I am not pretending to quote the exact
language. A. Yes —

Q. — Except to the extent of 2 Vf> per cent of the total
amount of licensed film of the width of 1% inches, or nar¬
rower, supplied by such manufacturer to the licensor
and said licensees during any one year, which amount the
manufacturer was authorized to sell to persons not engaged
in the motion picture business, with the further exception
tlint the manufacturer might reserve the right to manufac¬
ture and sell sensitized films suitable for commercial pro¬
duction of negative and positive motion pictures of a width
not to exceed approximately three-quarters of an inch to
persons engaged in the motion picture business. What was
the purpose of prohibiting the manufacturer from selling
film of tlic standard width to persons other than the lieen-
♦ sees? A. Any licensed film that might be sold in this coun¬

try by a licensed manufacturer of raw film for moving picture
work would necessarily be used in an infringing camera, and
the manufacturer would therefore be contributing to the
infringement.. The purpose of the condition was to minimize

1578 Frank L. Dyer, Direct Examination.

1 as much ns possible infringements of tlie Edison patents. In

a sense it amounted to a license to the raw film manufacturer “

under the Edison patents, or, in other words, a license against
contributory infringement. My recollection is that this par¬
ticular provision later on was modified, or, at least, was
not observed by the Eastman Compnny.

Q. In negotiating your contract with the Eastman Com¬
pany was it pointed out, do yon know, to the Enstinan Com¬
pany that if they sold this raw film to any persons other
than the Edison licensees the Eastman Company itself would
be a contributory infringer of the patents of the Edison

2 Company?

Mr. Guosvenor : Objected to as hearsay.

Tlie Witness: Yes, that point was fully explained to the
Eastman Company.

By Mr. Caldwell :

Q. Yon have staled that, one of the purposes was to
minimise or lessen tlie danger of infringement. To what

3 extent, if any, do you think it had that result in actual op¬
eration? A. I am not able to say, but I think during the
time the condition was observed it reduced infringements to
some extent.

Q. Did you state why tlie exception was made in this
restriction . to the extent of two and one-half per cent, of the
raw film sold by the Eastman Company? A. Yes, 1 re¬
member that tills point was brought up by Mr. Enstinan
when we were discussing with him the advisability of this ■
condition. He stated that to his knowledge there were a
number of people in the United States who were taking up .

4 the moving picture work, more or less in an amateur way,

for the purpose of taking pictures of subjects of natural
history, etc., and lie mentioned a friend of bis in the Yellow¬
stone Park, who was making moving picture records show¬
ing the habits of wild animals. He stated he thought it fif)

would be for the public good to allow this work to go on .

even if it was an infringement; mid therefore, this excep¬
tion was made, leaving it to the Edison Compnny to stop
those infringements if it saw fit to do so.

Q. Why was the manufacturer of sensitized film . left

\ , ■ff;

Frank L. Dyer, Direct Examination. 1570

free to sell film three-fourths of an incli in width or less to 1
persons engaged in the motion picture business other than
the licensor or licensee? A. That had to do with the pro¬
posed household or toy machines which it was thought
might be made, and all of which would use film of the
narrower width. We were dealing in these agreements
with the standard film that had developed in the art, and.
could not very well tell what the development would be iu
other lines.

Q. I call your attention to the covenant contained in
Paragraph 5— if you will refer to that— not to “sell, or
otherwise dispose of, or offer for sale in the territory afore- 4
said, unexposed positive or negative licensed film during
the continuance of this agreement.” What was the pur¬
pose of this provision? A. The purpose of that condition
was to prevent licensees from securing the film and selling
it to an infringer. I do not think there was any objec¬
tion to one licensee selling film to another licensee, which
apparently would be covered by the condition, although
that might have been something that we objected to. *

Q. Explain what is meant by the use of “blank film”
for “leaders,” or “spacing,” ns the term is used in this g

paragraph? A. At the front of each picture is placed
a section of blank or colored or tinted film, to take up
the wear which is greatest at the end. A similar piece of
blank film is used at the finish of the picture and it is
called a “tail-piece.” Ordinarily when two or more pictures
are combined in a single reel they are separated by a few
feet of blank film. Of course, any tough, flexible, perforated
material, such as paper or cloth, might be used for these
purposes, but there is a great deal of waste in connection ,
with the production of these pictures, both at the studios,
and in connection with the manufacturing operations, so 4
that there is always a supply of blank filin' for these pur¬
poses.

Q.' What was the purpose of the prohibition against tlie
’ sale of second-hand positive or negative motion pictures,

0 or motion pictures which have become used, or shopworn';

or in any way damaged? A. The purpose of that condi¬
tion was to minimize the extent, to which old worn out ob¬
jectionable pictures might appear in the art. It was along
the same lines as the condition requiring the return of
film after a certain period of use. We felt that it would be

15S0

Frank L. Dyer, Direct Examination.

Frank D. Dyer, Direct Examina

1581

just ns objectionable to permit the licensee to sell old and
worn out film as it would he to permit the exchanges to
retain old and worn out film tor use in service. It would
he difficult to place an exact point at which a second-hand
picture might be objectionable, or not, so that the provi¬
sion prohibited all second-hand pictures from being sold by
the licensees.

Q. At the time of this licensing agreement in Janunry,
1908, was the use of old and worn out dim quite common,
in the business? A. Tes, they were very common. The
moving picture art had developed so. rapidly that the de¬
mand was greater than the supply, so that the pictures were
subjected to terrifle use, and many of them were very old
and worn. These were called in the art “rainstorms,”
which were quite common. Pictures of this sort were used
generally in vaudeville houses as chasers to drive out
audiences, and allow new people to come in. We felt sure
that pictures of this sort would simply do harm to the
business, and we had reason to believe that they were actu¬
ally ■harmful to the eye. As a result of the conditions of
this license agreement and subsequent license agreements
relating to the return of old and worn ont film, and pro¬
hibiting the sale of second-hand film, the condition of the
motion picture art has been very greatly improved, and I
doubt if any motion picture theatre now would put up for
a moment with the objectionable lilms that were quite
common in the art at the time the agreement was made.

Q. What is the meaning of the term “non-lieensed mo¬
tion pictures,” as it is used in that agreement? A. A non-
licensed motion picture is one produced or imported by
anyone not licensed under the Edison patents.

Q. Now, I want to call your attention to Paragraph G
of that agreement, which reads in parts as follows: “The
licensor and licensee further mutually covenant and agree
not to loan, rent out, sell, or offer for sale or otherwise
dispose of in the territory aforesaid, motion pictures to
anyone purchasing or otherwise obtaining, using, loaning,
renting or selling, or offering for sale or otherwise dis¬
posing of or dealing in non-licensed motion pictures.” Wlint
was the purpose to be subserved in prohibiting licensees
from selling to persons dealing in noh-licensed motion pic¬
tures? A. The purpose was to keep the licensees from giv¬
ing aid, comfort and support to infringers. We felt that

if the licensees could supply film to infringers, they would
thereby support infringers and give them better opportunity
to carry on and extend their infringing operations.

Q. When you say, “we felt,” you mean that the licensor
felt? A. The Edison Company.

Q Do yon think that the agreement produced that re¬
sult in whole or in part in its practical operation? A. I do.

1 think it minced infringement.

Q. It was a provision at least tending to secure the patent
owner in the exclusive enjoyment of his rights under the
patent, is that right? A. That was the purpose of it.

Q. Deferring now to Paragraph 9 of this agreement,
which establishes a schedule of minimum prices, will you
please state the reasons which actuated the licensor and
licensees in fixing a minimum schedule?

Hr. Ghosvenor: It is understood, I take it, that
the objections heretofore made will apply to all this
line of testimony, that these questions are all imma¬
terial—

Mr. Caldwell (interrupting) : I have not heard
that objection before.

Mr. GnosvENOii: I think I have mnde it.

Mr. Caldwell: Yon can put it on the record if you
want to.

Mr. GROSVenor : I will state it again, then, in order
that there may be no question, that I object to all this
line of testimony as to reasons or motives that mny
have actuated any of these people in doing any of the
acts, on the ground that these are immaterial. The
motives are immaterial — whether the witness is asked

to testify in regard to the motives that actuated them

in making the agreements of January, 1908, or in re¬
gard to the motives which actuated them in making
subsequent agreements, or any of the agreements in
this case.

Mr. Caldwell: Inmnswer to that I will say that
we are charged in the petition with having executed
these various agreements with the motive of suppress- .
ing competition, and restricting competition, and es¬
tablishing a monopoly. If the purpose which actuated
the defendant in entering into these agreements is
material as charged in the petition, it is clearly com-

Frank L. Dser, Direct Examination.

15S3

1582 Frank L. Dyer, Direct Examination.

potent tor ns to bring out the real motive which did
actuate them.

Mr. Grosvbnor : That question lias not yet arisen,
because all the testimony today, and all the questions
so tar addressed to the witness, relate to the agree¬
ments of January, 1908, which, ns X recall the petition,
are not even referred to in the petition; therefore my
objection so far made is not contrary to anything set
out in the petition regarding the purposes.

Mr. Caldwell : The agreements of January, 1908,
were the forerunners of the agreements of December,
1908, and I propose to connect the two in such a way
as to make this testimony entirely admissible.

Mr. Grosvbnor: All right; go ahead. I want my
objection on the record.

By Mr. Caldwell :

Q. Will you answer the question? A. There were several
reasons why a minimum price was established. We felt that
the motion picture art had great possibilities. In the early
davs, up practically to the time of the granting of these li¬
censes, and even to a large extent at that time, most of the
films used- were exhibited largely because of their novelty.
Some of these films simply showed little incidents and scenes,
such as Niagara Falls, the American flag, the Empire State
Express, waves washing the shore, and so forth. Some films
had been made that were more or less dramatic, like the
“Great Train Robbery” of the Edison Company, and a pic¬
ture called “Personal” by the Biograph Company. Those
were probably the two best known pictures ever made up to
that. time. We felt that the art could progress along the
lines of the drama, removing the motion picture from its field
merely as an ephemeral novelty, to a standard form of amuse¬
ment,’ and we believed that the competition between the pro¬
ducers should therefore extend along the line of quality of
production, and not on price. So that a producer of these
pictures, knowing what he could get per foot, would be able
to put the greatest possible value in each foot or subject.
The art has progressed since the grunting of these licenses
to a very remarkable extent, and is now no longer merely a
novel form of entertainment, that appeals to people because
of its novelty, lint is an assured and established form of

amusement, its popularity being probably greater than any
other form of amusement in the world. In addition, a very
important reason for providing for a minimum schedule,
as I recall, ivas the fact that the Edison Company occupied
the dual relation of licensor and competitor, and it was felt,
and the fear was expressed by the licensees, that if the Edi¬
son Company should receive a large income annually in the
form of royalties, they would be placed at an unfair advan¬
tage in competing with the licensees. Therefore a minimum
price was fixed, which was designed to represent a fair aver¬
age of prices then current, so that any such unfairness on
the part of the Edison Company, should it choose to take ad¬
vantage of its position, might be checked. I . do not recall
any others. I may think of something later.

Q. Did the establishment of that minimum schedule have
any effect on the price of admission paid to motion pictures?
Did it raise the price of admission to motion pictures in any
wav? A. No, not at all. The usual price of admission then,
and at the present time, is five cents. In some localities the
price is ten cents or more where the theatres are very large,
or where the program is so long that the audience cannot be
changed often, but the price at that time and now, or at least
the usual price, is the minimum American standard of five
cents, and that price could not be reduced, no matter how
much cheaper the pictures might be made, any more than
could the price of soda water or beer be reduced if the cost of
production is lessened.

Q. Was it believed by the licensor that the royalty which
it was to receive would ultimately be greater if a minimum
schedule were established, than it would be if no restriction
were placed upon the licensees as to prices? A. Yes, it was
felt that unless this and other conditions were imposed that
tended to promote tiie eventual development of the business,
the royally would be less than if there were no conditions.
We, felt that— I said “we;” I mean the Edison Company—
that by trying to do everything that we could within the
territory of our patents to elevate the business and make it

i schedule was binding upon the Edison

Frank L. Dyer, Direct Examination.

1 its position as a producer of motion pictures is concerned,
to all the conditions and stipulations of the license agree¬
ments, except the payment of the royalty.

Q. Was each manufacturer left free to charge what he
pleased for his product, so long as it was not below the
minimum schedule? A. Yes, sir.

Q. Was there any agreement or understanding between
the manufacturers on that question, outside of the written
agreements? A. No, sir.

Q. I think you have stated that the minimum price fixed
in this schedule fairly represented the average of the price

2 prevailing nt the time the agreement was made. Is that cor¬
rect? A. That is as I recall it, yes, sir. Some of the pro¬
ducers were selling at a lower price and others above this,
but I think this was a fair average.

Q. Why did this paragraph of the agreement provide that
a new minimum scale of prices might be adopted by a plu¬
rality vote of the licensor and licensees, based upon the out¬
put, 1,000 feet of new subjects, placed on sale in the territory
covered by the agreement? A. No one would be able to say
that a fair, reasonable price established at the time of these
agreements might be fair and reasonable under different

3 conditions. We felt the conditions might change, as, for
example, substantial reductions in the price of raw material,
which would permit a lower price in the finished picture, or
increase in the investment, or increase in the salaries of
actors, or increase in the character of the pictures required
by the public, that would necessitate an advance of the mini¬
mum price. Therefore, since the minimum price could not
be fixed immutably for all time, it is recognized that it
should be subject to change when conditions required it. The
licensees being competitors, of the Edison Company, would

. not permit the Edison Company arbitrarily to change the
price, because the Edison Company had a clear advantage
of two or three hundred thousand dollars annually in roy¬
alties, which would enable them to fix a price that would be
unfair to the licensees. It was felt therefore that the licen¬
sees should participate in the consideration of a change in
price, and it was felt that the vote representing the relative
size of the several licensees would be a fair way to determine
that question. When I say relative size; I do not mean that
the relative size of the licensees would be the same at all
times as was the case when the license was issued, because

1585

Frank I* Dyer, Direct Examination.

the particular manner of taking the vote was of such a char-
<£j actcr that under competitive conditions, the licensees might

grow or be reduced in size, and their vote would correspond¬
ingly be changed. The idea was to provide a voting scheme
that would take into account cliunges in the size of the'
manufacturers under the stress of competition.

Q. And those chnuges in size actually did take place,
did they not? A. They did, in a very interesting way. For
instance, when the Edison licensees were first formed, the
Kalem Company had just been started, and it was such a
small factor in the business, that we debated seriously
whether we should recognize them and license them, but they
were licensed, and since the grant of this license, the Kalem
Company has developed in a very remarkable way in size and
in the character of its pictures, so that at the present time it
stands among the first four of the licensed manufacturers.
In tlie case of the Essanay Company, the situation was about
the same. They were a small, unimportant concern, that
we thought a license might be refused to without particular
injustice, but they were licensed, and have developed so that
. they are a very large, powerful concern now. On the other
hand, the Patlie Company at that time was the predominant
factor of tlie licensed interests, making much more film than
anybody else —

Q. (interrupting) : You mean importing much more film
than anybody else? A. Putting out. Importing und putting
out much more film than anybody else, and apparently set¬
ting a standard for all of us to follow, und under competi¬
tive conditions, the Patlie people have been pulled down
from the top, and instead of using sixty per cent of foreign
film as was the case in the early days, we are using only
about ten per cent. And there has been change in the rela-
' tive position of the Edison Company, and change in the po¬
sition of the Lubin Company. In fact, there lias been a
gradual shifting up and down of tlie several concerns that
started out under the Edison licenses from that time to this.
All dne to the efforts on tlie part of each to excel the other
% and to try to get up above their competitors if they could.

' Q. What is meant by the term “new subjects placed on
sale” as it is used in that paragraph? A. That means the
negative footage of released subjects; in other words, if a
manufacturer or producer was releasing four subjects a
week of a thousand feet each, that would be four thousand

158fi

Frank D. Dyer, Direct Examination.

1587

1 feet, so far as the vote was concerned, whether ten copies of

each subject were disposed of, or fifty copies, as I remember Q)

it.

Q. What is the meaning of the term “standing order,”
which we find in Paragraph 10 of this agreement, and
what was the purpose of the requirement timt a standing
order should remain in force for not less than thirty con¬
secutive days? A. A standing order was an order placed
for one or more prints of each subject released by the li¬
censee. It was exactly like the subscription to a maga¬
zine, except that it could he cancelled on thirty days’ no-

2 tice. It provided for the continuous supply of pictures of
that particular make under the order. It required some
time to print up a number of copies from a single negative,
and, therefore, it was necessary that time should be given
to a manufacturer in cancelling a standing order, because
if a manufacturer found himself with one or more prints on
his hands that he had printed up under the belief that the
standing order still stood, he would have difficulty in get¬
ting rid of them.

Q. Why were sales for export not covered by the agree¬
ment? A. Because the patents did not extend beyond the
■ territory of the United States, we felt that we could not
impose conditions on export sales. Of course, the films were
produced in the United States, and therefore paid royalty,
but what happened to them after they left the United States
we had no control over.

Q. What was the purpose of the provision in Paragraph
12 as to special motion pictures, where it was agreed be¬
tween the- manufacturer and the person ordering the same,
that the negative should be the exclusive property of the
person ordering it, and positive prints to be mnile from
4 time to time by the licensees on the order of such person,
the price being fixed at ?1 per running foot for making
' the negative, and not less than fifteen cents per running
foot for the positive printed from it? A. These special
motion pictures were something outside of and apart from
the regular business. It amounted to a very snmll part of *3)

the business, and, I think, still amounts to a very small
part of tiie business. They were pictures that were made
at the request of some outsider for a special. purpose.

Q. By “outsider” yon mean someone not engaged at all
in the motion picture business in nny of its plmses? A.

Yes. For instance, the City of New York might want to
(A have a picture taken showing the Street Cleaning Depart¬

ment. The Navy Department might want a picture taken,
showing what a very pleasant life the American sailor
leads. Manufacturers require pictures showing operations,
for the purpose of impressing their customers. The Na¬
tional Cash Register Company has hail a great many mo¬
tion pictures made to illustrate questions of salesmanship.
’These were special pictures, the negatives being the prop¬
erty of the person or corporation for whom the picture was
made. I remember the Southern Pacific Railroad Company
had pictures mode showing the development of the Texas
lands. And there were quite a good many of them, but in
the aggregate, compared to the amusement side of the busi¬
ness, they amounted to very little. The reason these par¬
ticular conditions were imposed, was the same as in con¬
nection with the minimum price, the Edison Compnny being
a competitor, could have gone out after this particular busi¬
ness and secured all of it at prices tlmt the other licensees
could not possibly have met, and it was felt that the price
of a dollar per foot was reasonable. That, would be only
$500 for a five hundred fdot. subject, which would involve
sending a man and a camera and an outfit, generally arc
lamps, and so forth, sometimes to quite distant points. The
price of fifteen cents was made higher than for the regular
amusement pictures because generally not more than two
or three copies were printed from these special negatives.
But this part of the business was nlmost inconsequential.

Q. I call your attention to the provision contained in
Paragraph 17 of this same agreement: “No sale except for
export shall be made except under certain terms and condi¬
tions, one of which is that the purchaser shall return to
the licensor or licensee, as the case m«y be, from time to
time, such positive motion pictures that have been pur¬
chased, on the first day of every month, beginning with
August 1st, 1908, an amount of positive motion pictures in
running feet not purchased over, six months before, and
of the make of the licensor or licensee, ns the case may lie,
to whom it is returned, equal to the amount that was so
purchased during the sixth month preceding the date of
such return.” And I ask you what was the purpose of this

requirement of the return of film? A. The purpose of this
. condition was to require the return of old, worn-out nnd

1588 Frank L. Dyer, Direct Exasiination.

eye-impairing film, the idea being to improve the character _

of the exhibitions. As I recall, this particular condition
was not imposed or was not insisted upon or carried out by
the Edison Company, under its license agreements, but was
later on embodied in the agreements with the Patents Com¬
pany, and carried out by that company. The effect ot the
condition was to largely reduce the number of these objec¬
tionable films and improve the quality of the exhibition,
and as the result of this improvement, our competitors, in
order to meet our competition, are required to give ex¬
hibitions of films in equally good condition. The “rain¬
storms” that I spoke of in the previous answer, wore bring¬
ing about a condition of disrepute, so that many people
who saw motion pictures only in the vaudeville shows,
looked upon them as very tedious and objectionable, in fact,
in the old days, generally, the moment a motion picture ap¬
peared, everybody began to scramble out.

Q. Was it intended by this provision in any way to
limit tlie quantity of film in circulation? A. No.

Q. Or to create an artificial market, or demand for more
film? A. No. The reason was to improve the character of
the exhibitions by removing these very objectionable films
from the market.

Q. In fact, did this return of film have any effect what¬
ever on the supply of new film? A. I do not- think so. I
think that the conditions of this business are such that the
film is passed through certain regular well-defined channels,
and when they have passed through those channels, and
have served their purpose, their usefulness has practically
ended, and they might come back without detriment to any- •
one; in other words, there is a definite track over which the
films pass. They start out at one end and come out at
the other end, and when they come out at the rear end of
the track, they have practically served their usefulness and
further uses would only be to injure the public and injure
tlie art.

Q. Now, viewing the question from the standpoint of the
owner of the patent strictly, and not his interest as a pro- W

ducer of motion pictures, was this restriction as to the re¬
turn of film of advantage to the patent owner? A. Yes. It
was of advantage to the patent owner in the same respect
that all these conditions were of advantage to the patent
owner, namely, to improve the tone of the business, improve

Frank L. Dyer, Direct Examination. 1589

the character of the business, change it from a side show
ft proposition to a high-class theatrical proposition. That do-

■ velopment has actually taken place. The very development

that we expected and predicted. At the time the Edison
licenses were made, almost the only theatres in existence
were the small store shows. It was generally one room with
some battered chairs in it, and a screen at one end, and the
projecting machine at the other. The exhibition was given
in absolute darkness. The place was badly ventilated, ex¬
tremely dangerous in case of fire, and being in absolute
darkness, terrible complaints of all kinds of immoral prac¬
tices were made; in fnct, tlie ordinary motion picture place
was looked upon almost as a house of assignation. By im¬
proving the character of the films, we have been able to culti¬
vate the interest of cultured and refined people in them, so
that tlie tone of the entire audience has improved, and as a
result of that improvement, the reaction lias necessarily
benefited the owners of the patents.

Q. Was it believed that it tended to increase the revenues
which he would ultimately derive from his royalties under
the patents? A. Certainly. That is what I intended to Bay
in few words.

Q. Could you say what percentage of any of the film
returned to the manufacturer after tlie expiration of tlie
six months was fit for further use for exhibition purposes?
A. No, I could not. With a proposition involving thou¬
sands of films, it is impossible to lay down any fixed definite
rule concerning each one. You will have to deal with general
rules, and the general rule is that a film that is six or seven
months old is pretty well worn out. Creditable exhibitions
cannot be given with it. Of course, in actual practice, films
are sometimes returned that are not worn out. They are
returned because tlie public will not permit their exhibition.
Becently with our company, we had a film that was put out
that was of an advertising nature, and tlie theatres refused
to run it because they refused to advertise the goods of any- '
, one. Then sometimes a film will be worn out very quickly •

•ft) because it is very popular, and will be subjected to the

greatest amount of usage in the first two or three months. ,
That kind of a film would be returned. And sometimes we
are unfortunate enough to have a film ruined the first week
or the first day or the first time it is run through the ma¬
chine, due to the imperfect operation of the projecting ma-;

1590 Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examination. 1591

1 chine, or the stupidity of some operator, and such a film ns
that is returned,— so that it is impossible to have nny fixed
rule that applies to all films, but taking the question from
all angles, I think that it can be said that the average film
that has been run under average conditions six to seven
months is worn out and ought to be returned.

Q. And that had been the actual experience of the Edison
Company ns a producer of motion pictures nt the time this
agreement was made? A. Yes, sir. We wanted to give the
films their full measure of life, but get them back before

o they did harm.

2 Q. Paragraph 7 provides that the licensor and licensee
shall mark conspicuously on the labels which shall be placed
on the boxes or packages containing motion pictures, certain
terms and conditions of sale, which labels were to be headed
ns follows: “Licensed motion pictures patented in the
United States, August 80th, 1897, reissued January 12th,
1904. The enclosed motion picture is sold upon the following
terms and conditions.” Then follow four, conditions under
which the picture is sold, the first of which is that the pur¬
chaser shall not re-sell the same, but shall have only the

„ right to use it in giving motion picture exhibitions or to rent
it out. Do- you know in point of fact whether the labels on
the boxes containing motion pictures manufactured and
sold by the licensees and the licensor and required to he so
marked, were, in point of fact, so marked, in accordance with
the printed conditions required by this paragraph? A. So
far as I know, that is so. It was certainly so in the case of
the Edison Company and I believe it was so with the other
licensees, because we saw that they received these labels,
and I have occasion to see a good many pictures put out by
tlie other licensees, and they all contain this label on the box.

4 . Of course, I was quite interested in this particular proposi¬
tion, and would have noticed if the label bad not been on
the box.

Q. In Paragraph 18 the licensor and licensee covenant
that they will not dispose of the motion pictures by lonning
them or renting them to others, nor use them for the purpose
of giving exhibitions thereof for profit. What was tlie pur¬
pose to be subserved by that covenant? A. The reason for
tlie restriction or condition against loaning or' renting films
to others was to prevent tlie licensees from avoiding the
other condition of the license relating to the minimum price,

in other. words, the- licensee might interest itself in one or 1
Q, more exchanges, and lend or rent its films to that exchange

: at a low price. That is my present recollection of this par¬

ticular condition. The restriction regarding exhibitions by
the licensees had to do, I think, with preventing licensees
from going into the exhibition business. As I recall, the
exchanges witli which we dealt at that time were fearful
that the manufacturers might take up tlie exhibition busi¬
ness, and I think this condition was designed to prevent the
manufacturers from interesting themselves in the theatres.

• Q. And did that covenant have some relation to the
amount of royalties to be paid ultimately under the patents? *
A. In the same sense that all the conditions had, that we
wanted to impose conditions that would result in tlie satis¬
factory development of the business, and as the result of
the prosperity which we thought would come to licensees
under proper conditions, the Edison Company would re¬
ceive a larger amount of royalty.

Q. Most of the provisions to which I have particularly
called your attention in the Edison license agreements, were
subsequently incorporated in tlie license agreements made
by the Motion Picture Patents Company, and its ten so- g .
called manufacturers and importing licensees, which are
already in evidence in this case, is that right? A. Yes, sir.

Q. Confining your answer to sucli of the foregoing provi¬
sions as were substantially incorporated in tlie Motion Pic¬
ture Patents Company licenses, you may state whether or
not tlie purpose or purposes of including them in tlie latter
licenses were tlie snme ns was the case in tlie licenses is¬
sued by tlie Edison Manufacturing Company, having in
mind, however, the fact that tlie Motion Picture Patents
Company, the licensor under this license agreement, was
not itself engaged in the motion picture business, that is, 4
producing or manufacturing. A. All the conditions or the
reasons for tlie conditions were the same in the case of the
Patents Company as with tlie former Edison licenses, and
■■ all of the reasons which impelled the licensees to protect

Qr £) themselves from unfair treatment on the part of the Edi¬
son Company as a competitor, were doubly present in the
cuse of the . Patents Company, in view of tlie fact that the >
Patents Company was owned by two competitors, namely, •
the Edison Company and the Biograph Company.

Q. You were President of the Motion Picture Patents

Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examina

1593

Company, were you not, from its organization up to about
December, 1912? A. I was President from December 18th,
1908, until X resigned in December, 1912.

Q. Then you were President at the time when all of
these license agreements were executed in Deecmbr of 1998?
A. I was.

Q. What was the reason which induced the Patents Com¬
pany, instead of authorizing the sale of these motion pic¬
tures, to restrict it to a lease? A. That was done as a re¬
sult of our experiences under the Edison licenses. So far
as the exchanges were concerned, it made no difference,
because under the Edison licenses, there was a conditional
sale with the return of the film at the end of six months,
while under the Patents Company licenses, there was a
lease for the return of the film at the end of seven months;
in other words, the Patents Company license in terms of
percentage was sixteen and two-thirds per cent, more favor¬
able than the Edison license. The main purpose of pro¬
viding tor a lease instead of a sale was to more effective¬
ly prevent infringement. Under the Edison licenses, if a
licensed film, in violation of the conditions of the license,
was shown by an unlicensed person, it was difficult to en¬
force the agreement, because, in the first place, it was very
difficult to identify the particular copy of the subject, and
trace it back to the infringing exchange. There was no
way that we could seize it, and it would have been futile
to have brought a patent suit against the theatre, because
the film was used by the theatre only from one to two or
three days. I recall that one of the experiments we tried
was to suggest to certain of the manufacturers to put-
private marks on ench copy of a picture, so that they
would be able' to tell when the picture was thrown on the
screen to whom it was sold, and thereby trace it back to
the infringing exchange. This was an expensive process,
because it meant putting a certain individual mark on
each print, and a considerable amount of bookkeeping in
keeping track of them, and I do not recall that anything
came of this suggestion, but by providing for the lease of
the films, which did not affect in one iota the rights of the
exchanges or their free use of the film in exactly the same
way that they had used them under the Edison licenses, we
were able in case of a violation of the license to seize the
films by replevin suits, or rather, the individual manufac¬

turers were able to do that, and a good many of these
replevin suits were successfully carried out in the case or
the violation of the licenses by infringing theatres. Also
another reason that impelled us to change to the lease was
that in <piitc a number of States there are unfavorable laws
on the subject of conditional sales, and we felt that we
might involve ourselves in difficult problems if we con¬
tinued the former plan of selling the films conditionally.
This change did not in any way prejudice the exchange, and
it was of very great help to us in enforcing our legitimate
patent rights.

Q. By unfavorable laws in many of the States, do you
refer to the laws of States like Pennsylvania, for instance,
where a conditional sale of a chattel, that is to say, a sale
with a reservation of title in the vendor, is not recognized?
A. Yes. We had run afoul of those laws in handling the
Edison business phonograph on the instalment plan. I
thiuk there were similar laws in the State of Ohio.

Q. Did you find also, that it was difficult to enforce the
requirement of the provision in your license as to the re¬
turn of film after six months, where title had passed? A.
Yes. We did not, as I said before, have any of the film
returned under the Edison licenses, but —

Q. (interrupting) : You were confronted with that dif¬
ficulty? A. We were confronted with that difficulty, and
a good many exchange men in talking with me, expressed
the opinion that, having bought the films, they thought they
ought to be allowed to keep them, and not be required to
return them. And I think if we had gone on under that
arrangement, we would undoubtedly have confronted dif¬
ficulty with a good many exchange people who did not seem
to appreciate what a conditional Bale was.

Q. Wlmt was the purpose of incorporating in the Mo¬
tion Picture Patents Company exchange license agreement,
the paragraph reserving to the Patents Company the right
to cancel the license on fourteen days’ notice? A. There
were a good many reasons for this. There was no way, or,
at least, there did not seem to be any way, to bind the ex¬
changes irrevocably to the Patents Company, and compel
them to always remain licensees, and deal in licensed films.
They always reserved the right to renounce the license when¬
ever they saw fit. to do so.

1B04 Frank D. Dyer, Direct Examination.

My. Grosvenor : Whom (lo yon mean l>y “they?”
The Witness: The exchanges.

By My. Caldwell:

^rsjsis^“£2»a“^

Q. The exchange did not pay any consideYation to the
Patents Company tor these licenses did s“y

ii(.Qnse -was a mere privilege and not a light, Like any
license, it was the privilege to be immune from suit dur¬
ing the existence ot the license.

By Mr. Caldwell :

O You may narrate the events that led up to the forma-.
tionQot the Patents Company. A. When the Ellison licenses
were in effect, the business resolved itself into two antagon¬
istic factions, the Edison licensees on the one hand, and the
Biograph Company and Mr. Kleine, I think, and I tin
one or two Biograph licensees, on the other. Our patent on
the camera had been sustained, and our position was theie-
55a pretty strong, and we had the Aim patent which covered
all motion picture films; while, on the other hand, the 13 o-
graph Company had patents on which it was assertin its
rights ; particularly on projecting machines. These weie

Frank L. Dyer, Direct Examination. «0o

the Imtharn patent and the Pross patent, and the Armat- 1
Jenkins patent. We were going abend with the accounting
on the camera patent, and were also pressing the suit on
the film patent against the Biograph Company, and .against
various infringers in the Biograph camp. On tom pa .
they had brought a suit against us on tlieir patents. \\ lien
I say “us,” I mean the Edison Company and its licensees. It
looked very much as if all the fighting that we : had been
g gel ever since 1898 or earlier was to stuit all ovei
again. When the Edison licenses were being granted, I
offered the Biograpli Company a license, but they refused to
takeit, and later on I saw Mr. Marvin with Mr. Kennedy,
at the suggestion, I think, of Mr. Patlie, or poBSibly Mi.
Gnmnont may have made the suggcstion,-and we discussed
the possibility of settling our suits— settling our patent dif
Acuities. Because we both realized that if the suits that
were pending should turn out successfully to the patentees,
we would simply embargo each other. We wou i d prevent
the operation of any successful camera under the canieia
patent, and we would prevent the sale or the use or any
importation of film under the film patent, and they would,
prevent the use or exhibition of any film, however made,
under the patents of the Biograph or Armat companies. Mi.
Marvin explained the case from his point oi ! t io ^ and
pointed out the importance of his patents, how valuable they
were, and thought it might be possible to have some scheme
under which we would recognize his patents, and lie would
recognize our patents, with a division of the royal hes I

asked him how much royalty he thought the 1 mgraph inter¬
ests should get, and lie said he thought, they should get half,
"allnotthinkhe should get half, because Mr. Edison’s pat-

the licenses granted, and he was getni
fifty or three hundred thousand dollars
I thought his position was rather fine
stronger than the Biograpli. Mr. Mar

Judge Hazel, and could
injunction, and the Lathi
and was valuable for tlia
were entitled to half of tl

e made the basis of preliminary
n patent had a long time to run,
reason, and he thought that they
j royalties, and I would not agree

1590 Frank L. Dyer, Direct Examtxa

and the fight' went on again. Or, 'rather, the fight still con¬
tinued, because tliis brief talk- did not stop it at all. Then a
little later, at the request of Mr. Kleine, I went up to see
him at the Republican Club. I had always known him and
liked him, and he told me that the constant fighting between
the Biograph and Edison companies, with the terrific uncer¬
tainty of the result, had put everybody up in the air, and
they did not know where they were, and ho suggested that if
we possibly could, we ought to get together and hnve some
agreement that would result in a termination of all the war¬
fare, and putting the business in a condition of quietude, so
that people could go' ahead and invest money' in their plants,
and build better theatres and develop the business. Well, I
saw Mr. Marvin and Mr. Kennedy again, I think in company
with Mr. Kleine, and we went through the same performance
that we did at our first meeting, Mr. Marvin making his
speech, and I making my speech, and he making his demand
for half of the royalties, and I refusing the demand, until it
occurred to me that if Mr. Edison could be assured that he
would get his film royalties, why, it would be possible then
to allow tlie Biograpli Company to take an equivalent
amount out of the royalties that might be collected from
other sources, and that anything remaining over should then
be divided between the two interests, because primarily my
purpose was to try to save the money that Mr. Edison was
getting under liis patents. I did not want to jeopardize that
or divide it up with anybody. This suggestion met with the
approval of Mr. Marvin and Mr. Kennedy, and then I saw
that it was possible to have an arrangement that would
bring the two concerns together. We had a talk at that
time, and I think we had several other talks about how the
thing should be done, and naturally the first suggestion was
for them to recognize our patents by taking a license under
our patents, and we to recognize their patents by taking a
license under the Biograph patents, but this seemed to be a
very difficult thing to do, and it would have to be done any¬
way by means of a combination or arrangement, so as to
divide the royalties that were to be collected, and it seemed
to us that the only proper way to do was to bring all the
patents into one holding corporation to act as a licensor,
and that would provide the various ways of collecting the
royalties, and that would collect the royalties, and that

Frank U Dyer, Direct Examination. 1597

would divide the royalties between the several patuut own¬
ers, on the basis that we had ngreedupon, and that company
was later formed and was called the Motion Picture Patents
Company.

Mr. Caldwell: It is uow half-past four, our
usual time of adjournment, mid I suggest that wo
adjourn until tomorrow, at the usual hour.

The Examiner: The hearing is adjourned until
10:30 o’clock tomorrow morning.

Whereupon, at 4:30 P. M. on this 10th day of November,
1913, the hearings are adjourned until Tuesday, the 11th day
of November, 1913, at 10 :30 A. M., at the Hotel Manhattan,
New York City.

Evidence.

1000 Frank L. Dyer, Direct Examination.

1 Thereupon FRANK L. DYER resumed the stand.
Direct examination continued by Mr. Caldwell:

Q. Mr. Dyer, in answer to my last question yesterday,
in speaking of your conference witli Mr. Marvin, you stated
that Mr. Edison was getting from two hundred and fifty
to three hundred thousand dollars a year out of licenses.
Did you mean by that he was getting that sum from his
royalties alone under his patents, or altogether, including
his profits from his producing plant? A. That is what
.2 I figured the royalties would amount to.

Q. After the formation of the Patents Company, to
what persons were licenses issued, first, licenses to produce
and to import? A. Licenses were granted to the seven
Edison licensees, and also to the Edison Company, Bio¬
graph Company, and to George Kleine.

Q. Did these persons constitute substantially all of the
persons engaged in the production and importation of mo¬
tion pictures at that time? • A. I should say a very con¬
siderable portion.

Q. Those who were not licensed, were they of any
8 importance in the art? A. No, sir.

Q. So substantially the entire art was licensed? A.
Substantially so.

Q. And to what other classes of persons were licenses
issued? A. Licenses were also issued to the manufacturers
of projecting machines, and also to exchange men who were
doing a distributing business, and finally to theatres
who might wish to show licensed film.

Q. I think it is in evidence that abont ninety-five per
cent, of the manufacturers of projecting machines were
licensed. Does that accord with your recollection? A. I
4 think fully that. I know that all of the important manu¬
facturers were licensed. And X might add that licenses
were gran ted. to other concerns who started up in business
for the manufacturing of projecting machines after the
Patents Company was formed.

Q. What was the policy of the Patents Company, in the
issuance of licenses to exchanges? A. To grant a license
to any fairly representative exchange which might wish to
he licensed. I do not recall that any license was refused

Frank L. Dyer, Direct Examination. 1(101

to an exchange at the time that the Patents Company 1
was started.

Q. Can you state why the license agreement, or the
license to George Kleine, restricted his importations to
the makes of certain European producers? A. At that
time, as I stated yesterday, the Patho Company towered
head and shoulders above the other producers, und es¬
pecially in Europe, and next to them, although considerably
smaller, was the Gaumont Company, and below the Gnu-
inont Company was a large number of small producers.

Mr. Kleine had agency contracts for a great number of
brands of films, most of which we never heard of. We ”
felt that it would be a mistake to allow these unimportant
foreign made films to enter into the programmes of the
American manufacturers, because we were fearful that it
would not add prestige to it. The Gaumont films, and the
Urban Eclipse films were good representative foreign films,
and the best of the films Mr. XCleine was importing, and
we felt that these films could properly bo introduced into
the programmes. Mi-. Kleine wns, therefore, allowed the
importation of three subjects per week, of these two films,
but, of course, he was not restricted as to the number of g

copies that he could import, and dispose of. This gave
the iiccnsed output of foreign films— as Patlie, Gaumont,
Urban Eclipse, and Melics. My recollection is that most
all, or at least many of the films that were formerly
handled by Mr. Kleine were, when he terminated his agency
for them, imported into this country by other concerns.

So that their importation into this country was not stopped,
although they were not licensed.

Q. So far as you know, did Mr. Kleine protest against
being restricted to importation of these two brands of
films? A. No. Those two brands were practically his .4
entire business.

Q. Were many of the other films imported by Mr.
IClcine of a character to reflect credit upon the art? A.

No, they were poorly and cheaply made, and many of them,
as I recall, were not the kind that would appeal to the
■ American people. AS a matter of fact, foreign films, I do
not think, at any time appealed very strongly to Americans,
because the foreign idea ,of morals is different from the
Americun idea; but a large mass of foreign films wns used
in the early days, because those were all that the Ameri-

1002 Frank L, Dver, Direct Examination.

Frank l. Dvbr, Direct Examination.

1003

1 can lmd, except the limited number of American films

that were being gradually developed. r }

Q. In refusing, then, to license these cheap films, many
of which were not up to the American standard of morals,
was the Patents Company actuated by any purpose or
desire to improve the condition of the art, and thereby in¬
crease the revenues which they might ultimately receive
under their patents? A. Yes, sir.

Q. Mr. Dyer, will you state just what the motion picture
business is, as it is conducted in this country today? A.

The motion picture business at the present time is prac-

2 tically a theatrical business, because it deals, for the most
part, with dramatic works. It makes the same appeal to
the imagination that is made by the drama. It is a new
form of intellectual appeal. It depends for its successful
accomplishment, first, upon an optical defect of the eye,
known ns the persistence of vision, and it depends, in the
second place, upon the Iranian faculty of forming mental
images when the imagination is aroused, as with litera¬
ture, paintings, music, or the drama. A moving picture
audience is like any other audience, sitting spellbound and
unconscious of its surroundings. Like the regular stage,

3 the spectator of a moving picture, experiences the feelings
and sensations of -the characters which appear on the
screen. These photographic images are just ns real to
the moving picture spectator as are the living, breathing,
actors and actresses of the regular stage. The popular
motion picture actresses are just ns ranch overwhelmed
by letters from admirers as the most popular nctresscs of
tiie regular stage, although they are known to the people
only by reason of their photographic representations.

. Mr. Ghosvbnok: That is highly interesting, but

1 I fail to see how it is relevant or material, and, there¬

fore, we make objection to it.

Mr. Caldwell : I think it very material to show
to the Court the real nature of the business coil- .

ducted by these defendants, which they are charged (_r

with restraining and monopolising.

The Examiner : Proceed, Mr. Witness.

A. (continuing) : The motion picture business, like
the theatrical business; falls naturally into three groups —

first, the producer; second, the distributor, and third, the 1
* exhibitor. In the production of a motion picture drama,

» the play is selected and prepared, in precisely the same way

as if for the regular stage, except, of course, with the
regular drama, the playwright provides the spoken words;
but in the case of pantomime there is really no difference in
the original play, except that the motion picture, because
of its greater flexibility, and greater possibilities, permits
of many more scenes, and the securing of effects that
would not even lie suggested in the case of n pantomime.
Having prepared the play, it is turned over to a director, 0
exactly as is the case with the regular drama, and that "
director gathers around him in one case, as in the other,
the body of actors selected to perform the respective parts.

In each case costumes are provided, proper scenery is
painted, and the necessary properties secured. The di¬
rector rehearses the actors so that they may become .per¬
fect in their parts, exactly as the director of a regular
stage conducts his rehearsals; and when perfection is
reached, the motion picture camera is brought out, and
the finished performance given before the camera, and a
photographic negative record taken of that performance. g
In other words, so far as the production is concerned,
the motion picture art is the same as the regular dramatic
art, except that instead of utilising the body of actors
collected by the director to go out on the road and give
their performances before the various audiences, the di¬
rector in the case of the motion picture play sees that
a photographic record of the drama is made, and copies of
this record are sent out on the road, and are exhibited in
the several theatres. The second class, or group, connected
with the motion picture business, namely, the distributor,
has its analogy in the regular theatrical business in the 4
booking office, or in the booking agency, and in the mo¬
tion picture business this distributor is called nn ex-
. change. The purpose of the exchange is to distribute the

plays among the motion picture theatres. Decause of the
4$ brevity of the motion picture, a programme usually com¬

prises three or more plays, and these programmes are
chnnged from one to seven times weekly. With the more
important pictures, which are a recent development, and
which seem to be destined to greater use in the future, pic¬
tures of the same general type as Quo Yadis — the hooking

is precisely the same as the boohing of a regular dramatic
. performance, dates being arranged in advance, and ad¬
vertised by the theatres exactly as they might advertise a
regular road show. The only difference between a dis¬
tributor, or exchange, in the motion picture business, and
the booking office, or the booking agency, in the theatrical
business, is that in one cose the distributor deals with the
photographic record of the play, while the booking agency
in the tlientrical business, deals with living, breathing
actors, and the tangible accessories of the performance,
such as scenery, costumes and properties, including in the
latter sometimes, various animals. The difference between
the moving picture business in this respect, and the theat¬
rical business, is that ' the transportation of a tlientrical
company may require one or two cal's, while the moving
picture requires a package smaller than a dress suit cnse.
So far as the third group is concerned, namely, the theatres,
one is practically the same as the other. In fact, it is
very common for motion pictures to be shown in regular .
theatres, and it is getting to be more and more common
for small plays, and vaudeville acts, to be shown in con¬
nection with motion pictures in picture houses. In fact, in
one State that I know of, Massachusetts, the law pro¬
hibits continuous exhibitions of pictures for more than
twenty minutes at a time, so that it is necessary to fill in
with vaudeville, or small plays.

The only difference between a motion picture theatre
and a regular theatre is that while a regular theatre has
a horizontal stage, upon which the actors perform, a mo¬
tion picture theatre makes use of a vertical screen, upon
which the photograhic representations of the actors are
projected; and also, a motion picture theatre is generally
smaller than a regular theatre, and more economically
run, and the price of admissions is almost invariably

Frank L. Dyer, Direct Examination. 1005

mission to motion picture theatres is less than to
other theatres.

Mr. Caldwell: But those are not necessarily
matters of which the Court would take judicial no¬
tice — we have got to prove them.

The Witness: Mr. Grosvenor might stipulate.'

The Witness: I don’t think I t

Q. Then, in point of fact, the only thing which differen¬
tiates the picture play from the regular theatrical play is
that the latter is presented by living actors, and by word
of mouth, and the former by photographic images of these
same actors? A. That is correct, and apparently the effect
on the audience is the same in the one case as in the
other. In the case of the motion picture it seems to be
a very remarkable fact that the imagination of the audience
revivifies the photographic images, and turns them into
life. Not only this, but the imagination also supplies the
perspective to the fleeting images, and also supplies color
to the black and white photographs. The incongruity of
a black and white rose never seems to uppeul to a mov¬
ing picture audience.

Q. The various mechanical devices involved in the pro¬
duction of the motion picture play are not apparent at all
to the audience, are they? A. You mean the cameras

Q. Yes, the cameras, projecting machines, and any
other mechanical devices used in the production of the
play? A. No, sir. The only thing that the audience sees
is the photographic images on the screen, apparently in
movement.

Q. The film itself is not seen? A. No, sir.

Q. Will you state what classes of persons are engaged
in the production of the motion picture play? A. The di¬
rector who — ■

Q.' (interrupting) : Isn’t there a class of persons who

1000 Frank L. Dyer, Direct Examination.

have something to do with the business or contribute to .

the business, that precedes even the director? A. Yes. Q •

First I should take the scenario writer, who prepares the
necessary play or drama ; then the director, who attends
to the rehearsing of the actors; then the actors who ap¬
pear in the play; scene painters who prepare the scenario;
carpenters who make the necessary properties; people who
have charge of the costumes and wigs; and finally, the
camera man, who actually operates the camera to take
the picture; with the usual accessories of electricians and
mechanics generally found around a studio or in a regular
theatre.

Q. What class of persons in the motion picture business
are employed in your second class that you have described,
which you have stated is analogous to the booking office or
booking agency? A. These are the exchanges. Offices that
are located at centers of distribution, in charge of a
manager who is familiar with the business, with a stock
of films that is constantly mobile, inspectors and repairers,
who are attending to the inspection and cleaning and re¬
pairing of the film, booking men, who attend to the booking
of the programs to the several customers, and the usual
office employees, who attend to the general work.

Q. While it is usual for the producer of motion pic¬
tures to have a so-called manufacturing plant ns pnrt of
his equipment, is that always a necessity? A. No, the
manufacturing operations are quite independent of and dis¬
tinct from the purely artistic work of producing the plays.

Just as the mechanical work of a regular theatrical per¬
formance is independent of the artistic part. It is quite
the common thing in this country for studios where the
artistic work is done, to he located sometimes as far ns
three thousand miles away from the manufacturing plant
where the purely manufacturing operations are performed:

And in Europe, it is quite common for companies to go no
further than to attend to the artistic work of producing the
negative, leaving the manufacturing operations to some man¬
ufacturer. The Patlie Company, in Paris, for instance, do
the printing for quite a considerable number of the pro¬
ducers, and I believe this will be the eventual develop-,
ment, or one of the developments, possibly, in this country.

I think even now there are some concerns in America who

Frank L. Dyer, Direct Examination. 100T

have no manufacturing plants, but who merely make the
negatives.

Q. Take the case of the Edison Company. Will you
state where its studio is located, and where its . so-called
factory is located? A. The main studio of the Edison
Company is at Bedford Park, Bronx, New York, and the
factory where the printing operations are performed, is at
Orange, New Jersey, about twenty miles away. The Edison
Company also maintain a studio, or did, while was con¬
nected with them, at Los Angeles, California.

Q. Can yon state the locations of the Btudio and the man¬
ufacturing plant in the case of any of the other producers?
A. Yes. In the case of the Biograph Company, the factory
and main studios are located in Now York City, but they alBo
maintain a studio at Los Angeles. In the case of the Lubin
Company, the factory and one studio are located in Phila-
• dclpliiu, but they maintain very large studios at Betawood,
about thirty miles outside of Philadelphia, and studios also
in Jacksonville and Los Angeles. The Selig plant iB in Chi¬
cago, where its main studio is also located, but the Selig
Company maintains a large studio at Los Angeles. And
the same is true of the Essanay Company, which has recently
started the production of negatives, I think, at Watkins
Glen, New York. The Patlie Company have their manufac¬
turing plant at Bound Brook, and their American studio at
Hoboken, while their main studios are in Paris.

Q. Can you state why so many of the studios are located
in Los Angeles, California? A. On account of the generally
fine weather there, and the great variety of natural scenery,
just the same as many of the studios of French producers
are located on the Mediterranean.

Q. What has the fine weather to do with the work of a
studio? A. Because a great deal of work has to he done out¬
side of a studio, for getting outside scenes, and it is impor¬
tant that there should he as little waste of time os possible,
. because waste is very expensive in the production of pic-
tuves, and it is important to keep the actors employed as
O' * actively as possible. Good sunlight is also important to se¬

cure proper photographic quality.

Q. Then would you say that the term “manufacturer,” as
applied to the producer of motion pictures, was a misnomer
j in a sense? Does it correctly describe the occupation? A.

1G08 Frank L. Dyer, Direct Examination.

Frank L. Dvnn, Direct Examination.

11500

No, I do not think it does. I think the same relation exists
between the producer and a manufacturer, if we attempt to Q

separate them, that exists between the producers of the Cen¬
tury Magazine, who do the literary work and get up the
magazine, and the Do Vinne Press, that prints the copies of
the magazine.

Q. What percentage of motion pictures exhibited in this
country would you say are of a purely theatrical character,
that is to say, either drama, comedy or farce ? A. The num¬
ber varies from week to week, but I think the average would
be from 85 to 95 per cent.

Q. And the rest of the pictures are made up of so-called
scientific, educational, scenic and topical subjects, is that
correct? A. Yes, sir.

Q. What is meant by a scientific picture? A. A scientific
picture is one that illustrates some scientific phenomenon,
such as the flight of a bullet, or views of the moon, or a
chemical reaction, all of which have been shown in motion
pictures.

Q. What is an educational picture? A. It is not very
easy to—

Q. (interrupting) : Can you, strictly speaking, differen¬
tiate between a scientific picture and an educational picture?

A. Yes. I think an educational picture would be correctly
defined as one that possessed educational value without the
scientific attributes. For instance, a picture illustrating the
raising of sheep, or the iron industry, or the tobacco indus¬
try, or the sugar industry, all of which have been shown in
motion pictures. It is getting to be quite a common thing to
disguise educational pictures by a dramatic story, so as to
make them more attractive. For instance, the Edison Com¬
pany made a very well-known picture called “The Man Who
Learned;” which was designed to point out the dangers of
unsanitary conditions in connection with the supply of milk,
hut the moral was taught in a story of great dramatic inter¬
est. And we also made another picture called “The Wedding
Bell,” that was a strong dramatic story, but was essentially
an educational picture, because its object was to point out the ©<

evils of sweatshop labor. .

Q. What is a scenic picture? A. A scenic picture is one
that contains simply scenery, or possibly views taken in a
city, showing important buildings or streets. For instance,
a picture of the Alps would he a scenic picture, and one show¬

ing a panorama of Broadway, New York, would also be a
£) scenic picture.

. Q. And wimt is a topical picture? A. A topical picture
is one' that depicts a subject of topical interest, such as a
championship baseball game, or prize fight, or the inaugura¬
tion of a President, or a subject of this general character.

Q. What, do the so-called dramatic pictures, as the term
is used in the motion picture business, include? A. I do not
think the term dramatic picture is used, hut we refer to
dramas, by which we mean a story of dramatic interest, de¬
void of comedy or farcical features.

Q- Then the term “drama,” as used in this art, would in¬
clude tragedy and melodrama? A. No. We sometimes use
the term “melodrama” to mean a drama with tragic features,
but ordinarily the word “drama” includes everything of a
dramatic nature, except, comedies.

Q. Then are the terms used in the same sense that they
are used in the theatrical profession? A. Yes. In exactly
tile same sense.

Q. What are the considerations which enter into the
selection of a play to be produced on the motion picture
stage? A. Strength of plot, the timeliness of the subject,
interest of the story, the moral sought to be taught, are all
factors that are considered in the selection of a motion pic¬
ture play.

Q. They are precisely the same, then, as in the regular
theatrical business? A. Yes, sir, exactly. The motion pic¬
ture business, as I pointed out, is practically a theatrical
business.

Q. What means, if any, are resorted to by the producer
of a play or the exhibitor, in ol der to supply the omission
of the spoken word? A. The fact that with the. motion
picture play, there is no dialogue except, of course, in the
case of the talking pictures which are a recent develop¬
ment, it makes it impossible with a motion picture play to
get the very line shadings of emotion that are possible
with the. spoken word, so that the motion picture play is
V perhaps not as complex as the regular spoken play, hut

there are several ways to supply the deficiency of the
spoken word witli the motion . picture play, by which its
effectiveness is very much increased. For instance, the
actors, ns is well known, generally in rehearsing, make use
of words, and very frequently these words can he disting-

]G10 Frank D. Dveii, Direct Examination.

uiRhed on the screen, particularly when they are single
“ m,ch „s mother” or -help.” Then, the director lms
the advantage, which is not possible with the regular spoken
drama, of throwing sub-titles on the screen, that w t< saj,
words or phrases or sentences that are design^ .to tx
nlnin the siguilicance of the scene which is to follow. A
sub-title is used when the director fears that the proper
effect of a scene will not he appreciated. Then also
the motion picture play, it- is Very common to th ow ,m
the screen,, letters and telegrams and document* t ^

audicnce can read, for the purpose of making tl.e plot clea ,
n l id on the regular stage, are read by one of the
characters as a part of the dialogue. Then, a very effective
way of supplying the deficiency of the spoken word, is by
so-called double exposure, where, on the main picture up-,
pears a small auxiliary picture designed to explain the
action of the main picture. For instance, m a regnlai
spoken play, if one of the character, wished «ie ‘iiulience
to know that at one time he had been a -cowboy on t
western plains and lmd taken part in a certain incident, In.
woum tcU his story as part of the dialogue. In the motion
picture piny, we actually throw on the screen as an a
ary to the main picture, scenes showing the character ns a
cowboy on the western plains, and enacting the same inci¬
dent that he would describe by words in the regular play.
These various expedients have been developed in the art,
and permit motion picture plays of fairly complex charac¬
ter which are perfectly intelligible to the audience.

Q. Then the double exposure is a device winch makes
possible dramatic representations on the motion picture
stage which is impossible on the legitimate stage, is that
correct?, A. The double exposure, of course, on the regular
stage would be impossible, lint the same effect is secured
on the regular stage by menus of the spoken word.

Q. But the dramatic action is wanting? A. The dra¬
matic action is wanting, of course. _ „

Q. You have mentioned the play culled Quo \adis.
Have you ever seen that play? A. Yes, sir.

Mr. Guosvhnou: May I interrupt? Who brought
out Quo Vadis?

Frank L. Dyer, Direct Examination. . 1G11
The Witness: The Cines Company at Milan.

Mr. Gbosvbnor: That is a foreign company, isn’t

Mr. Grosvbnor: I object to any examination
about Quo Vadis.

By Mr. Caldwell:

Q. Was Quo Vadis a picture imported by one of the
so-cailed licensed importers of the Motion Picture Patents
Company? A. Yes, sir, it was imported by Mr. Kleme.

Q.. And that picture is licensed by the patents owned
l,y the Motion Picture Patents Company, is it not? A.
Yes, sir.

Mr. Caldwell: I think that answers your ob¬
jection, doesn’t it, Mr. Grosvcnor?

By Mr. Caldwell:

Q. There is a scene in that picture that, takes place in
the Roman amphitheatre, is there not? A. Yes, sir.

Q. Could you describe Hint scene briefly? A. Yes. The
scene shows the representation of the Roman amphitheatre
with Nero and his attendants in the seats or honor, and a
good many thousand spectators depicted ns the audience,
and tlie turning of the lions into the amphitheatre to de¬
vour the Christian martyrs.

Q. Are all of these spectators in motion? A. They are
the photographs of real people.

Q. Ill motion? A. In motion.

. Q. Would such a scene ns that he possible on the regu¬
lar dramatic stage? A. No, sir. ’ _ •

Q. Why not? A. Because of the limitations of the
stage, it would he impossible to anywhere near approximate
the size and grandeur of the settings. On the regular stage,
the audience in the amphitheatre would be confined prolm-

1G12 Frank L. Dyrk, Dinner Examination.

bly to fifty to a hundred people. In the motion pictures, I

think there were tit least three thousand m the audience, Q

and possibly five.

Q. On the regular stage, the spectators would be repre¬
sented, would they not, by painted linages on the scenery?

A. They might he. Or they might be- real people gathered
on the stage.

Q. There is another scone in that piny which depicts
the burning of Rome, ' is there not? A. Yes. There are
several scenes allowing the burning of Rome.

Q. Could that scene be possible of reproduction on the
regular dramatic stage? A. Not to the same extent. Not
with the same vividness nor could it cover the same area'.

The regular stage is necessarily circumscribed by. reason of
its limited size.

Q. From what sources do the producers of motion pic¬
ture plays obtuin their plays? A. Generally, the plays are
prepared by a new type of literary artist, who lias devel¬
oped with the art, called the scenario writer. Sometimes
these scenario writers are regular dramatists. For instance,
the present Congressman, E. W. Townsend, of my home
town, was a scenario writer for the Edison Company, anil
was also a dramatic writer and novelist. These scenario
writers base their plays on original plots, and somejtimep
they base them on other sources of literary work, such
ns standard works of fietion. The Bible is a very potent
source of inspiration for motion picture plays. Most of
the biblical scenes have been enacted as parts of motion
picture dramas. Most of the works of Dickens and Thack¬
eray have been converted into motion picture plays. Many
of the plays of Shakespeare have been used, and other
standard dramas. Poetry is also a source of inspiration.

The Lady of the Lake lias been given. Such an apparently
impossible subject as Pippa Passes, by Browning, was
made into a very beautiful motion picture play by the Bio¬
graph Company. By means of the motion picture, any
work of Action, or of the drama, can be presented graph-
ically nnd vividly to the audience for Hve cents. W

Q. Does it happen with more or less frequency that the
authors of plays, playwrights, who write for the regular
dramatic stage, also write motion picture plays?' A. Many .

dramatic authors write motion picture plays. For instance,

I have mentioned the case of Congressman Townsend. And

(

Frank L. Dyeii, Dinner Examination. 1013

I know that Mr. Augustus Thomas is now' working on mo- 1
0 tion picture plays, and also Charles Klein.

Q. Does it often happen that a well-known work of
Action is dramatized for the motion picture stage, just
ns it is on the regular dramatic stage? A. Oh, yes. That
is another source of inspiration. For instance, the Famous
Players Company are just putting out a play called, “In
the Bishop’s Carriage,” which Arst appeared as a novel.

.And also, “Soldiers of Fortune,” by Richard Harding
Davis, is now being mnde into a motion picture play, and
this Arst appeared as a novel.

Q. Do you happen to know whether “Ben Hur” and- ®
“The Last Dnys of Pompeii,” have also been dramatized
for the motion picture stage? A. Yes. Both of these
works have been made into motion picture plays.

Q. Would you say that that is typical of whut has been
done, and what is being done every day in the motion
' picture art? A. Yes. The motion picture art is bringing
these Ane, standard, elevnting works, to the attention of
millions of people of the United States, who possibly other¬
wise would know nothing wbntever about them.

Q. Does it often hnppen that a regular dramatic pro- „
dnetion which has appeared upon the so-called legitimate
stuge, has also been enacted before the motion picture cam¬
era, and reproduced on the motion picture stage? A. Yes,
that also has been, and is being, done.

Q. Is any knowledge of stugecraft, ns applied to the
legitimate stage, requisite for the motion picture produc¬
tion after the play has been selected? A. Absolutely. The
motion picture director has to be just as skilful in sizing
up and properly plucing a. dramatic situation, ns on the
regular stage. He has to also keep in mind at nil times,
the limitations of the Aeld of the camera, and must keep 4
his actors at the proper distance away from the camera.

And he also 1ms to be familiar with the conditions of light,
so ns to secure the proper photographic effect But in a
dramatic sense, his work is identical with the work of the
ordinary stage director.

■ Q. And the ultimate object is to produce the same ef¬
fect upon the motion picture audience ns is produced in
a regular theatre? A. That is the real object. .

Q. To what extent do the producers of motion pictures’
have stock companies of actors, and actresses in their ein-

1014 Frank L. Dyer, Direct Examination.

1 ploy? A. All the licensed producers, ns far ns I know,

employ from one to ten regular stock companies for the A)

purpose of making the motion picture plays.

Q. And the same thing is true of the unlicensed pro¬
ducers, is it not? A. As far ns I know, it is.

Q. From what class of persons are these stock com¬
panies recruited? A. In a large measure from actors from
the regular stage. There is a constant shifting back and
forth of actors from the regular stage to the motion pic-,
ture stage, and vice versa, and constant shifting of actors
from one motion picture company to another, in fact,

2 the motion picture work is looked upon hy the actors ns
simply one of the opportunities for employment.

Q. Is it quite common for stars in the theatrical world
' to accept engagements on the motion picture stage? A. Tes.

This is getting to he quite common. Sarah Bernhardt,

James K. Hnckett, Mrs. Fiske, Charles Hnwtrey, are all
well known stars, nnd they have appeared in motion pic¬
tures. ■ .

Q. Will you describe a motion picture studio and its
equipment? A. Motion picture studios are of throe classes.

First, the outdoor studio; second, the daylight studio; and
8 third, the so-called dark studio. With an outdoor studio,
there is simply a platform out of the sunlight with the
stage sets, properties, and scenery, and the action takes
place out of doors, the photographing being done by sun¬
light. These studios, of course, are used only in good
weather, and for a limited number of hours each day. They
are more common in places like Jacksonville and Los An¬
geles, where the. climatic conditions are favorable. The
daylight studio is a large building, somewhat like an im¬
mense conservatory, with an extensive stage, nnd a glass
4 roof, and ordinarily, glass sides. Generally, daylight stu¬
dios are equipped with powerful arc lights for the purpose
of supplementing the sunlight in overcast weather, or for
working at night, or for accentuating certain' lighting ef¬
fects which would be impossible for sunlight. For instance,
the glare from a fireplace. These daylight studios are pro- A.

vided with screens made of thin cloth to be pulled over the
glass top for the purpose of diffusing the light, exactly as
in an ordinary portrait studio. The third class, or dark
studio, is very similar to the daylight studio, except that, it
is a large closed room lighted entirely by artificial means.

Frank L. Dyer, Direct Examination.

1015

A modern studio is equipped with a scene-painting depart¬
ment for the manufacture of scenery, nnd a large property
room is also provided, in which a multitude of, the com¬
moner properties are kept, also costume room, carpenter
shop, and other necessary accessories.

Q. Dressing rooms for the actors nnd actresses? A.
Dressing rooms for the actors and actresses, nnd rooms in
which the directors work, nnd so forth. I have lmd in mind
in answering your question, particularly the Edison day¬
light studio, but I have visited the studios of most of the
licensed manufacturers, and the same description applies
substantially to all of them. Sometimes the daylight studio
will be combined with a dark studio in a building of several
Jloors, the upper floor being enclosed in glass so as to com¬
prise the daylight studio.

Q. After the motion picture play has been selected,
what is done in the way of providing costumes and scenery,
and properties, and so forth? A. Ordinarily the director
who is assigned to put on the play, after having studied the
play very carefully so as to thoroughly understand it, pro¬
vides that the proper scenes shall be painted, giving the
directions to the scene-painting department, and also pro¬
vides for the nccessnry costumes and properties. He gen¬
erally explains the plays to the actors who may have been
selected to perform the parts nnd explains to them what
characters they are to take, and how they are to be made
up. The making-up of a motion picture actor is the same
substantially as on the regular stage, except that the make¬
up is somewhat accentuated, and also regard has to lie
taken to the proper photographic quality of certain colors.
For

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